Correlation Between BlackRock Frontiers and Falcon Oil

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

By analyzing existing cross correlation between BlackRock Frontiers Investment and Falcon Oil Gas, you can compare the effects of market volatilities on BlackRock Frontiers and Falcon Oil 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 Frontiers with a short position of Falcon Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Frontiers and Falcon Oil.

Diversification Opportunities for BlackRock Frontiers and Falcon Oil

0.45

Correlation Coefficient

BlackRock Frontiers  Falcon Oil

Very weak diversification

The 3 months correlation between BlackRock and Falcon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Frontiers Investment and Falcon Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Oil Gas and BlackRock Frontiers 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 Frontiers Investment are associated (or correlated) with Falcon Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Oil Gas has no effect on the direction of BlackRock Frontiers i.e., BlackRock Frontiers and Falcon Oil go up and down completely randomly.

Pair Corralation between BlackRock Frontiers and Falcon Oil

Assuming the 90 days trading horizon BlackRock Frontiers Investment is expected to generate 0.35 times more return on investment than Falcon Oil. However, BlackRock Frontiers Investment is 2.88 times less risky than Falcon Oil. It trades about 0.03 of its potential returns per unit of risk. Falcon Oil Gas is currently generating about 0.01 per unit of risk. If you would invest  13,192  in BlackRock Frontiers Investment on October 24, 2024 and sell it today you would earn a total of  2,208  from holding BlackRock Frontiers Investment or generate 16.74% return on investment over 90 days.

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

BlackRock Frontiers Investment  vs.  Falcon Oil Gas

BlackRock Frontiers

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Frontiers Investment are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BlackRock Frontiers may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Falcon Oil Gas

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Falcon Oil Gas are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Falcon Oil exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock Frontiers and Falcon Oil

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

The idea behind BlackRock Frontiers Investment and Falcon Oil Gas 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.