Correlation Between BlackRock and Phenixfin

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

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

Diversification Opportunities for BlackRock and Phenixfin

0.12

Correlation Coefficient

BlackRock  Phenixfin

Average diversification

The 3 months correlation between BlackRock and Phenixfin is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Phenixfin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phenixfin 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 Phenixfin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phenixfin has no effect on the direction of BlackRock i.e., BlackRock and Phenixfin go up and down completely randomly.

Pair Corralation between BlackRock and Phenixfin

Considering the 90-day investment horizon BlackRock is expected to generate 0.7 times more return on investment than Phenixfin. However, BlackRock is 1.42 times less risky than Phenixfin. It trades about 0.13 of its potential returns per unit of risk. Phenixfin is currently generating about 0.04 per unit of risk. If you would invest  93,603  in BlackRock on October 7, 2024 and sell it today you would earn a total of  8,480  from holding BlackRock or generate 9.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

BlackRock  vs.  Phenixfin

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.

Phenixfin

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Phenixfin are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Phenixfin is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock and Phenixfin

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

The idea behind BlackRock and Phenixfin 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.