Correlation Between BlackRock and Jollibee Foods

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

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

Diversification Opportunities for BlackRock and Jollibee Foods

-0.3

Correlation Coefficient

BlackRock  Jollibee Foods

Very good diversification

The 3 months correlation between BlackRock and Jollibee is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Jollibee Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jollibee Foods 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 Jollibee Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jollibee Foods has no effect on the direction of BlackRock i.e., BlackRock and Jollibee Foods go up and down completely randomly.

Pair Corralation between BlackRock and Jollibee Foods

Considering the 90-day investment horizon BlackRock is expected to generate 0.38 times more return on investment than Jollibee Foods. However, BlackRock is 2.66 times less risky than Jollibee Foods. It trades about -0.02 of its potential returns per unit of risk. Jollibee Foods is currently generating about -0.02 per unit of risk. If you would invest  101,962  in BlackRock on October 21, 2024 and sell it today you would lose (1,466) from holding BlackRock or give up 1.44% of portfolio value over 90 days.

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

BlackRock  vs.  Jollibee Foods

BlackRock

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, BlackRock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Jollibee Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jollibee Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BlackRock and Jollibee Foods

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

The idea behind BlackRock and Jollibee Foods 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.