Correlation Between BlackRock and RENN Fund

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

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

Diversification Opportunities for BlackRock and RENN Fund

-0.03

Correlation Coefficient

BlackRock  RENN Fund

Good diversification

The 3 months correlation between BlackRock and RENN is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and RENN Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RENN Fund 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 RENN Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RENN Fund has no effect on the direction of BlackRock i.e., BlackRock and RENN Fund go up and down completely randomly.

Pair Corralation between BlackRock and RENN Fund

Considering the 90-day investment horizon BlackRock is expected to under-perform the RENN Fund. But the stock apears to be less risky and, when comparing its historical volatility, BlackRock is 2.21 times less risky than RENN Fund. The stock trades about -0.05 of its potential returns per unit of risk. The RENN Fund is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  227.00  in RENN Fund on December 28, 2024 and sell it today you would earn a total of  25.00  from holding RENN Fund or generate 11.01% return on investment over 90 days.

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

BlackRock  vs.  RENN Fund

BlackRock

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

RENN Fund

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RENN Fund are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, RENN Fund reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock and RENN Fund

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

The idea behind BlackRock and RENN Fund 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.