Correlation Between BlackRock and BBX Capital

Can any of the company-specific risk be diversified away by investing in both BlackRock and BBX Capital at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BlackRock and BBX Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock and BBX Capital, you can compare the effects of market volatilities on BlackRock and BBX Capital and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BlackRock with a short position of BBX Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and BBX Capital.

Diversification Opportunities for BlackRock and BBX Capital

-0.88

Correlation Coefficient

BlackRock  BBX Capital

Pay attention - limited upside

The 3 months correlation between BlackRock and BBX is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and BBX Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBX Capital and BlackRock is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BlackRock are associated (or correlated) with BBX Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBX Capital has no effect on the direction of BlackRock i.e., BlackRock and BBX Capital go up and down completely randomly.

Pair Corralation between BlackRock and BBX Capital

Considering the 90-day investment horizon BlackRock is expected to generate 2.27 times more return on investment than BBX Capital. However, BlackRock is 2.27 times more volatile than BBX Capital. It trades about 0.22 of its potential returns per unit of risk. BBX Capital is currently generating about -0.14 per unit of risk. If you would invest  88,122  in BlackRock on August 31, 2024 and sell it today you would earn a total of  13,823  from holding BlackRock or generate 15.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

BlackRock  vs.  BBX Capital

BlackRock

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, BlackRock disclosed solid returns over the last few months and may actually be approaching a breakup point.

BBX Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BBX Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, BBX Capital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock and BBX Capital

The main advantage of trading using opposite BlackRock and BBX Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock position performs unexpectedly, BBX Capital can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BBX Capital will offset losses from the drop in BBX Capital's long position.

The idea behind BlackRock and BBX Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.