Correlation Between BlackRock and Sofina Société

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

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

Diversification Opportunities for BlackRock and Sofina Société

-0.75

Correlation Coefficient

BlackRock  Sofina Société

Pay attention - limited upside

The 3 months correlation between BlackRock and Sofina is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Sofina Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sofina Socit Anonyme 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 Sofina Société. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sofina Socit Anonyme has no effect on the direction of BlackRock i.e., BlackRock and Sofina Société go up and down completely randomly.

Pair Corralation between BlackRock and Sofina Société

Considering the 90-day investment horizon BlackRock is expected to generate 0.69 times more return on investment than Sofina Société. However, BlackRock is 1.46 times less risky than Sofina Société. It trades about 0.06 of its potential returns per unit of risk. Sofina Socit Anonyme is currently generating about 0.02 per unit of risk. If you would invest  71,172  in BlackRock on October 5, 2024 and sell it today you would earn a total of  30,568  from holding BlackRock or generate 42.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	61.13%
Values	Daily Returns

BlackRock  vs.  Sofina Socit Anonyme

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.

Sofina Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofina Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sofina Société is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BlackRock and Sofina Société

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

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