Correlation Between BlackRock and PACIFIC

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

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

Diversification Opportunities for BlackRock and PACIFIC

-0.63

Correlation Coefficient

BlackRock  PACIFIC

Excellent diversification

The 3 months correlation between BlackRock and PACIFIC is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of BlackRock i.e., BlackRock and PACIFIC go up and down completely randomly.

Pair Corralation between BlackRock and PACIFIC

Considering the 90-day investment horizon BlackRock is expected to generate 2.66 times less return on investment than PACIFIC. But when comparing it to its historical volatility, BlackRock is 3.02 times less risky than PACIFIC. It trades about 0.13 of its potential returns per unit of risk. PACIFIC GAS AND is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,997  in PACIFIC GAS AND on October 5, 2024 and sell it today you would earn a total of  1,906  from holding PACIFIC GAS AND or generate 21.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.08%
Values	Daily Returns

BlackRock  vs.  PACIFIC GAS AND

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.

PACIFIC GAS AND

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PACIFIC GAS AND are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, PACIFIC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock and PACIFIC

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

The idea behind BlackRock and PACIFIC GAS AND 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.