Correlation Between BlackRock and 02005NBJ8

Can any of the company-specific risk be diversified away by investing in both BlackRock and 02005NBJ8 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 02005NBJ8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock and ALLY FINANCIAL INC, you can compare the effects of market volatilities on BlackRock and 02005NBJ8 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 02005NBJ8. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and 02005NBJ8.

Diversification Opportunities for BlackRock and 02005NBJ8

-0.58

Correlation Coefficient

BlackRock  02005NBJ8

Excellent diversification

The 3 months correlation between BlackRock and 02005NBJ8 is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and ALLY FINANCIAL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLY FINANCIAL INC 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 02005NBJ8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLY FINANCIAL INC has no effect on the direction of BlackRock i.e., BlackRock and 02005NBJ8 go up and down completely randomly.

Pair Corralation between BlackRock and 02005NBJ8

Considering the 90-day investment horizon BlackRock is expected to under-perform the 02005NBJ8. In addition to that, BlackRock is 8.41 times more volatile than ALLY FINANCIAL INC. It trades about -0.05 of its total potential returns per unit of risk. ALLY FINANCIAL INC is currently generating about 0.05 per unit of volatility. If you would invest  10,036  in ALLY FINANCIAL INC on October 5, 2024 and sell it today you would earn a total of  14.00  from holding ALLY FINANCIAL INC or generate 0.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

BlackRock  vs.  ALLY FINANCIAL INC

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.

ALLY FINANCIAL INC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALLY FINANCIAL INC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 02005NBJ8 is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock and 02005NBJ8

The main advantage of trading using opposite BlackRock and 02005NBJ8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock position performs unexpectedly, 02005NBJ8 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 02005NBJ8 will offset losses from the drop in 02005NBJ8's long position.

The idea behind BlackRock and ALLY FINANCIAL INC 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..