Correlation Between Gurtin California and Blackrock

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

By analyzing existing cross correlation between Gurtin California Muni and Blackrock Pa Muni, you can compare the effects of market volatilities on Gurtin California and Blackrock 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 Gurtin California with a short position of Blackrock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gurtin California and Blackrock.

Diversification Opportunities for Gurtin California and Blackrock

0.92

Correlation Coefficient

Gurtin California  Blackrock

Almost no diversification

The 3 months correlation between Gurtin and Blackrock is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Gurtin California Muni and Blackrock Pa Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Pa Muni and Gurtin California 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 Gurtin California Muni are associated (or correlated) with Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Pa Muni has no effect on the direction of Gurtin California i.e., Gurtin California and Blackrock go up and down completely randomly.

Pair Corralation between Gurtin California and Blackrock

Assuming the 90 days horizon Gurtin California is expected to generate 1.33 times less return on investment than Blackrock. But when comparing it to its historical volatility, Gurtin California Muni is 1.89 times less risky than Blackrock. It trades about 0.06 of its potential returns per unit of risk. Blackrock Pa Muni is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  939.00  in Blackrock Pa Muni on October 9, 2024 and sell it today you would earn a total of  50.00  from holding Blackrock Pa Muni or generate 5.32% return on investment over 90 days.

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

Gurtin California Muni  vs.  Blackrock Pa Muni

Gurtin California Muni

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gurtin California Muni has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gurtin California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Pa Muni

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Pa Muni has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Gurtin California and Blackrock

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

The idea behind Gurtin California Muni and Blackrock Pa Muni 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.