Correlation Between General American and BlackRock Energy

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

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

Diversification Opportunities for General American and BlackRock Energy

0.29

Correlation Coefficient

General American  BlackRock Energy

Modest diversification

The 3 months correlation between General and BlackRock is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding General American Investors and BlackRock Energy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Energy and General American 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 General American Investors 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 General American i.e., General American and BlackRock Energy go up and down completely randomly.

Pair Corralation between General American and BlackRock Energy

Considering the 90-day investment horizon General American Investors is expected to under-perform the BlackRock Energy. But the stock apears to be less risky and, when comparing its historical volatility, General American Investors is 1.4 times less risky than BlackRock Energy. The stock trades about -0.02 of its potential returns per unit of risk. The BlackRock Energy and is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,224  in BlackRock Energy and on December 29, 2024 and sell it today you would earn a total of  130.00  from holding BlackRock Energy and or generate 10.62% return on investment over 90 days.

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

General American Investors  vs.  BlackRock Energy and

General American Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days General American Investors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, General American is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

BlackRock Energy

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Energy and are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish technical and fundamental indicators, BlackRock Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with General American and BlackRock Energy

The main advantage of trading using opposite General American and BlackRock Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General American 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 General American Investors 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.