Correlation Between Embrace Change and BlackRock Energy

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

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

Diversification Opportunities for Embrace Change and BlackRock Energy

0.52

Correlation Coefficient

Embrace Change  BlackRock Energy

Very weak diversification

The 3 months correlation between Embrace and BlackRock is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Embrace Change Acquisition and BlackRock Energy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Energy and Embrace Change 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 Embrace Change Acquisition are associated (or correlated) with BlackRock Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Energy has no effect on the direction of Embrace Change i.e., Embrace Change and BlackRock Energy go up and down completely randomly.

Pair Corralation between Embrace Change and BlackRock Energy

Given the investment horizon of 90 days Embrace Change Acquisition is expected to generate 0.43 times more return on investment than BlackRock Energy. However, Embrace Change Acquisition is 2.32 times less risky than BlackRock Energy. It trades about 0.04 of its potential returns per unit of risk. BlackRock Energy and is currently generating about 0.01 per unit of risk. If you would invest  1,184  in Embrace Change Acquisition on December 4, 2024 and sell it today you would earn a total of  11.00  from holding Embrace Change Acquisition or generate 0.93% return on investment over 90 days.

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

Embrace Change Acquisition  vs.  BlackRock Energy and

Embrace Change Acqui

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Embrace Change Acquisition are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Embrace Change is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BlackRock Energy

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Energy and are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, BlackRock Energy is not utilizing all of its potentials. The new stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Embrace Change and BlackRock Energy

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

The idea behind Embrace Change Acquisition and BlackRock Energy and 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.