Correlation Between BlackRock and Torrent Capital

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

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

Diversification Opportunities for BlackRock and Torrent Capital

0.5

Correlation Coefficient

BlackRock  Torrent Capital

Very weak diversification

The 3 months correlation between BlackRock and Torrent is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Torrent Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torrent Capital 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 Torrent Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torrent Capital has no effect on the direction of BlackRock i.e., BlackRock and Torrent Capital go up and down completely randomly.

Pair Corralation between BlackRock and Torrent Capital

Considering the 90-day investment horizon BlackRock is expected to under-perform the Torrent Capital. In addition to that, BlackRock is 1.26 times more volatile than Torrent Capital. It trades about -0.07 of its total potential returns per unit of risk. Torrent Capital is currently generating about -0.02 per unit of volatility. If you would invest  45.00  in Torrent Capital on December 30, 2024 and sell it today you would lose (1.00) from holding Torrent Capital or give up 2.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

BlackRock  vs.  Torrent Capital

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 latest weak performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Torrent Capital

Risk-Adjusted Performance

Very Weak

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

Pair Trading with BlackRock and Torrent Capital

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

The idea behind BlackRock and Torrent Capital 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.