Correlation Between Blackrock Natural and Guinness Atkinson

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

By analyzing existing cross correlation between Blackrock Natural Resources and Guinness Atkinson Global, you can compare the effects of market volatilities on Blackrock Natural and Guinness Atkinson 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 Blackrock Natural with a short position of Guinness Atkinson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Natural and Guinness Atkinson.

Diversification Opportunities for Blackrock Natural and Guinness Atkinson

0.96

Correlation Coefficient

Blackrock Natural  Guinness Atkinson

Almost no diversification

The 3 months correlation between Blackrock and Guinness is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Natural Resources and Guinness Atkinson Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guinness Atkinson Global and Blackrock Natural 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 Blackrock Natural Resources are associated (or correlated) with Guinness Atkinson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guinness Atkinson Global has no effect on the direction of Blackrock Natural i.e., Blackrock Natural and Guinness Atkinson go up and down completely randomly.

Pair Corralation between Blackrock Natural and Guinness Atkinson

Assuming the 90 days horizon Blackrock Natural Resources is expected to under-perform the Guinness Atkinson. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock Natural Resources is 1.11 times less risky than Guinness Atkinson. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Guinness Atkinson Global is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,349  in Guinness Atkinson Global on October 7, 2024 and sell it today you would lose (156.00) from holding Guinness Atkinson Global or give up 6.64% of portfolio value over 90 days.

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

Blackrock Natural Resources  vs.  Guinness Atkinson Global

Blackrock Natural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Natural Resources has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Guinness Atkinson Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guinness Atkinson Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Blackrock Natural and Guinness Atkinson

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

The idea behind Blackrock Natural Resources and Guinness Atkinson Global 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.