Correlation Between Freedom Bank and Blackhawk Growth

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

By analyzing existing cross correlation between Freedom Bank of and Blackhawk Growth Corp, you can compare the effects of market volatilities on Freedom Bank and Blackhawk Growth 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 Freedom Bank with a short position of Blackhawk Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Blackhawk Growth.

Diversification Opportunities for Freedom Bank and Blackhawk Growth

0.03

Correlation Coefficient

Freedom Bank  Blackhawk Growth

Significant diversification

The 3 months correlation between Freedom and Blackhawk is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Blackhawk Growth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackhawk Growth Corp and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Blackhawk Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackhawk Growth Corp has no effect on the direction of Freedom Bank i.e., Freedom Bank and Blackhawk Growth go up and down completely randomly.

Pair Corralation between Freedom Bank and Blackhawk Growth

Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the Blackhawk Growth. But the otc stock apears to be less risky and, when comparing its historical volatility, Freedom Bank of is 36.87 times less risky than Blackhawk Growth. The otc stock trades about -0.05 of its potential returns per unit of risk. The Blackhawk Growth Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Blackhawk Growth Corp on September 12, 2024 and sell it today you would lose (30.94) from holding Blackhawk Growth Corp or give up 99.81% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	81.98%
Values	Daily Returns

Freedom Bank of  vs.  Blackhawk Growth Corp

Freedom Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Bank of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Freedom Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackhawk Growth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackhawk Growth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Freedom Bank and Blackhawk Growth

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

The idea behind Freedom Bank of and Blackhawk Growth Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.