Correlation Between Financial and BlackRock Utility

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

By analyzing existing cross correlation between Financial 15 Split and BlackRock Utility Infrastructure, you can compare the effects of market volatilities on Financial and BlackRock Utility 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 Financial with a short position of BlackRock Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and BlackRock Utility.

Diversification Opportunities for Financial and BlackRock Utility

0.06

Correlation Coefficient

Financial  BlackRock Utility

Significant diversification

The 3 months correlation between Financial and BlackRock is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and BlackRock Utility Infrastructu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Utility and Financial 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 Financial 15 Split are associated (or correlated) with BlackRock Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Utility has no effect on the direction of Financial i.e., Financial and BlackRock Utility go up and down completely randomly.

Pair Corralation between Financial and BlackRock Utility

Assuming the 90 days horizon Financial 15 Split is expected to under-perform the BlackRock Utility. In addition to that, Financial is 2.25 times more volatile than BlackRock Utility Infrastructure. It trades about -0.04 of its total potential returns per unit of risk. BlackRock Utility Infrastructure is currently generating about -0.06 per unit of volatility. If you would invest  2,343  in BlackRock Utility Infrastructure on November 28, 2024 and sell it today you would lose (86.00) from holding BlackRock Utility Infrastructure or give up 3.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	68.97%
Values	Daily Returns

Financial 15 Split  vs.  BlackRock Utility Infrastructu

Financial 15 Split

Risk-Adjusted Performance

Very Weak

Over the last 90 days Financial 15 Split has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BlackRock Utility

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Financial and BlackRock Utility

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

The idea behind Financial 15 Split and BlackRock Utility Infrastructure 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.