Correlation Between BlackRock and Stellus Capital

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

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

Diversification Opportunities for BlackRock and Stellus Capital

-0.45

Correlation Coefficient

BlackRock  Stellus Capital

Very good diversification

The 3 months correlation between BlackRock and Stellus is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Stellus Capital Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stellus Capital Inve 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 Stellus Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stellus Capital Inve has no effect on the direction of BlackRock i.e., BlackRock and Stellus Capital go up and down completely randomly.

Pair Corralation between BlackRock and Stellus Capital

Considering the 90-day investment horizon BlackRock is expected to under-perform the Stellus Capital. In addition to that, BlackRock is 2.24 times more volatile than Stellus Capital Investment. It trades about -0.2 of its total potential returns per unit of risk. Stellus Capital Investment is currently generating about 0.22 per unit of volatility. If you would invest  1,471  in Stellus Capital Investment on November 28, 2024 and sell it today you would earn a total of  52.00  from holding Stellus Capital Investment or generate 3.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

BlackRock  vs.  Stellus Capital Investment

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.

Stellus Capital Inve

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellus Capital Investment are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental indicators, Stellus Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock and Stellus Capital

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

The idea behind BlackRock and Stellus Capital Investment 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.