Correlation Between Ocean Park and BlackRock High

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

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

Diversification Opportunities for Ocean Park and BlackRock High

0.31

Correlation Coefficient

Ocean Park  BlackRock High

Weak diversification

The 3 months correlation between Ocean and BlackRock is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Park High and BlackRock High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock High Yield and Ocean Park 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 Ocean Park High are associated (or correlated) with BlackRock High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock High Yield has no effect on the direction of Ocean Park i.e., Ocean Park and BlackRock High go up and down completely randomly.

Pair Corralation between Ocean Park and BlackRock High

Given the investment horizon of 90 days Ocean Park is expected to generate 132.5 times less return on investment than BlackRock High. In addition to that, Ocean Park is 1.17 times more volatile than BlackRock High Yield. It trades about 0.0 of its total potential returns per unit of risk. BlackRock High Yield is currently generating about 0.14 per unit of volatility. If you would invest  5,065  in BlackRock High Yield on December 2, 2024 and sell it today you would earn a total of  82.00  from holding BlackRock High Yield or generate 1.62% return on investment over 90 days.

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

Ocean Park High  vs.  BlackRock High Yield

Ocean Park High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ocean Park High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Ocean Park is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

BlackRock High Yield

Risk-Adjusted Performance

Good

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

Pair Trading with Ocean Park and BlackRock High

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

The idea behind Ocean Park High and BlackRock High Yield 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.