Correlation Between BTB Real and Black Hills

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

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

Diversification Opportunities for BTB Real and Black Hills

0.17

Correlation Coefficient

BTB Real  Black Hills

Average diversification

The 3 months correlation between BTB and Black is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BTB Real Estate and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and BTB Real 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 BTB Real Estate are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of BTB Real i.e., BTB Real and Black Hills go up and down completely randomly.

Pair Corralation between BTB Real and Black Hills

Assuming the 90 days horizon BTB Real Estate is expected to under-perform the Black Hills. But the pink sheet apears to be less risky and, when comparing its historical volatility, BTB Real Estate is 1.91 times less risky than Black Hills. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Black Hills is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  5,895  in Black Hills on August 31, 2024 and sell it today you would earn a total of  499.00  from holding Black Hills or generate 8.46% return on investment over 90 days.

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

BTB Real Estate  vs.  Black Hills

BTB Real Estate

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BTB Real Estate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, BTB Real may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Black Hills

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward-looking signals, Black Hills may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with BTB Real and Black Hills

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

The idea behind BTB Real Estate and Black Hills 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.