Correlation Between Black Stone and APA

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

By analyzing existing cross correlation between Black Stone Minerals and APA Corporation, you can compare the effects of market volatilities on Black Stone and APA 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 Black Stone with a short position of APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Stone and APA.

Diversification Opportunities for Black Stone and APA

0.04

Correlation Coefficient

Black Stone  APA

Significant diversification

The 3 months correlation between Black and APA is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Black Stone Minerals and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and Black Stone 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 Black Stone Minerals are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Black Stone i.e., Black Stone and APA go up and down completely randomly.

Pair Corralation between Black Stone and APA

Considering the 90-day investment horizon Black Stone Minerals is expected to generate 0.48 times more return on investment than APA. However, Black Stone Minerals is 2.09 times less risky than APA. It trades about 0.15 of its potential returns per unit of risk. APA Corporation is currently generating about 0.0 per unit of risk. If you would invest  1,380  in Black Stone Minerals on December 26, 2024 and sell it today you would earn a total of  156.00  from holding Black Stone Minerals or generate 11.3% return on investment over 90 days.

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

Black Stone Minerals  vs.  APA Corp.

Black Stone Minerals

Risk-Adjusted Performance

Good

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

APA Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days APA Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, APA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Black Stone and APA

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

The idea behind Black Stone Minerals and APA Corporation 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.