Correlation Between BlackRock and Great Elm

Can any of the company-specific risk be diversified away by investing in both BlackRock and Great Elm 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 Great Elm into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock and Great Elm Capital, you can compare the effects of market volatilities on BlackRock and Great Elm 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 Great Elm. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and Great Elm.

Diversification Opportunities for BlackRock and Great Elm

0.44

Correlation Coefficient

BlackRock  Great Elm

Very weak diversification

The 3 months correlation between BlackRock and Great is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Great Elm Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Elm 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 Great Elm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Elm Capital has no effect on the direction of BlackRock i.e., BlackRock and Great Elm go up and down completely randomly.

Pair Corralation between BlackRock and Great Elm

Considering the 90-day investment horizon BlackRock is expected to generate 2.2 times more return on investment than Great Elm. However, BlackRock is 2.2 times more volatile than Great Elm Capital. It trades about 0.11 of its potential returns per unit of risk. Great Elm Capital is currently generating about 0.08 per unit of risk. If you would invest  73,486  in BlackRock on October 5, 2024 and sell it today you would earn a total of  28,254  from holding BlackRock or generate 38.45% return on investment over 90 days.

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

BlackRock  vs.  Great Elm Capital

BlackRock

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, BlackRock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Great Elm Capital

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Great Elm Capital are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Great Elm is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BlackRock and Great Elm

The main advantage of trading using opposite BlackRock and Great Elm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock position performs unexpectedly, Great Elm 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 Great Elm will offset losses from the drop in Great Elm's long position.

The idea behind BlackRock and Great Elm 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.