Correlation Between Blackrock and Midas Special

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

By analyzing existing cross correlation between Blackrock Sm Cap and Midas Special Fund, you can compare the effects of market volatilities on Blackrock and Midas Special 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 with a short position of Midas Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Midas Special.

Diversification Opportunities for Blackrock and Midas Special

0.63

Correlation Coefficient

Blackrock  Midas Special

Poor diversification

The 3 months correlation between Blackrock and Midas is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Sm Cap and Midas Special Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midas Special and Blackrock 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 Sm Cap are associated (or correlated) with Midas Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midas Special has no effect on the direction of Blackrock i.e., Blackrock and Midas Special go up and down completely randomly.

Pair Corralation between Blackrock and Midas Special

Assuming the 90 days horizon Blackrock Sm Cap is expected to under-perform the Midas Special. In addition to that, Blackrock is 1.52 times more volatile than Midas Special Fund. It trades about -0.19 of its total potential returns per unit of risk. Midas Special Fund is currently generating about 0.11 per unit of volatility. If you would invest  3,448  in Midas Special Fund on September 21, 2024 and sell it today you would earn a total of  85.00  from holding Midas Special Fund or generate 2.47% return on investment over 90 days.

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

Blackrock Sm Cap  vs.  Midas Special Fund

Blackrock Sm Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Midas Special

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Midas Special Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Midas Special may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock and Midas Special

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

The idea behind Blackrock Sm Cap and Midas Special Fund 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.