Correlation Between Invictus Energy and BlackRock

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

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

Diversification Opportunities for Invictus Energy and BlackRock

-0.19

Correlation Coefficient

Invictus Energy  BlackRock

Good diversification

The 3 months correlation between Invictus and BlackRock is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Invictus Energy Limited and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and Invictus Energy 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 Invictus Energy Limited 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 has no effect on the direction of Invictus Energy i.e., Invictus Energy and BlackRock go up and down completely randomly.

Pair Corralation between Invictus Energy and BlackRock

Assuming the 90 days horizon Invictus Energy Limited is expected to generate 5.37 times more return on investment than BlackRock. However, Invictus Energy is 5.37 times more volatile than BlackRock. It trades about 0.04 of its potential returns per unit of risk. BlackRock is currently generating about -0.05 per unit of risk. If you would invest  4.25  in Invictus Energy Limited on December 28, 2024 and sell it today you would lose (0.12) from holding Invictus Energy Limited or give up 2.82% of portfolio value over 90 days.

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

Invictus Energy Limited  vs.  BlackRock

Invictus Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Invictus Energy Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Invictus Energy reported solid returns over the last few months and may actually be approaching a breakup point.

BlackRock

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BlackRock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Invictus Energy and BlackRock

The main advantage of trading using opposite Invictus Energy and BlackRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Invictus Energy 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 Invictus Energy Limited and BlackRock 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.