Correlation Between BlackRock Future and Sparta Capital

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

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

Diversification Opportunities for BlackRock Future and Sparta Capital

0.42

Correlation Coefficient

BlackRock Future  Sparta Capital

Very weak diversification

The 3 months correlation between BlackRock and Sparta is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Future Health and Sparta Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta Capital and BlackRock Future 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 Future Health are associated (or correlated) with Sparta Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta Capital has no effect on the direction of BlackRock Future i.e., BlackRock Future and Sparta Capital go up and down completely randomly.

Pair Corralation between BlackRock Future and Sparta Capital

Given the investment horizon of 90 days BlackRock Future Health is expected to under-perform the Sparta Capital. But the etf apears to be less risky and, when comparing its historical volatility, BlackRock Future Health is 19.7 times less risky than Sparta Capital. The etf trades about -0.04 of its potential returns per unit of risk. The Sparta Capital is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.03  in Sparta Capital on December 30, 2024 and sell it today you would lose (0.92) from holding Sparta Capital or give up 89.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BlackRock Future Health  vs.  Sparta Capital

BlackRock Future Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock Future Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, BlackRock Future is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sparta Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sparta Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, Sparta Capital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with BlackRock Future and Sparta Capital

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

The idea behind BlackRock Future Health and Sparta 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.

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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 Stocks Directory module to find actively traded stocks across global markets.