Correlation Between Backrock Glbl and Blk Rk

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

By analyzing existing cross correlation between Backrock Glbl Opprtnts and Blk Rk Sg, you can compare the effects of market volatilities on Backrock Glbl and Blk Rk 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 Backrock Glbl with a short position of Blk Rk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Backrock Glbl and Blk Rk.

Diversification Opportunities for Backrock Glbl and Blk Rk

0.91

Correlation Coefficient

Backrock Glbl  Blk Rk

Almost no diversification

The 3 months correlation between Backrock and Blk is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Backrock Glbl Opprtnts and Blk Rk Sg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blk Rk Sg and Backrock Glbl 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 Backrock Glbl Opprtnts are associated (or correlated) with Blk Rk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blk Rk Sg has no effect on the direction of Backrock Glbl i.e., Backrock Glbl and Blk Rk go up and down completely randomly.

Pair Corralation between Backrock Glbl and Blk Rk

Assuming the 90 days horizon Backrock Glbl Opprtnts is expected to generate 3.75 times more return on investment than Blk Rk. However, Backrock Glbl is 3.75 times more volatile than Blk Rk Sg. It trades about 0.27 of its potential returns per unit of risk. Blk Rk Sg is currently generating about 0.15 per unit of risk. If you would invest  1,771  in Backrock Glbl Opprtnts on December 20, 2024 and sell it today you would earn a total of  248.00  from holding Backrock Glbl Opprtnts or generate 14.0% return on investment over 90 days.

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

Backrock Glbl Opprtnts  vs.  Blk Rk Sg

Backrock Glbl Opprtnts

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Backrock Glbl Opprtnts are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Backrock Glbl showed solid returns over the last few months and may actually be approaching a breakup point.

Blk Rk Sg

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blk Rk Sg are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Blk Rk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Backrock Glbl and Blk Rk

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

The idea behind Backrock Glbl Opprtnts and Blk Rk Sg 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.