Correlation Between Blackrock and Great West

Can any of the company-specific risk be diversified away by investing in both Blackrock and Great West 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 Great West 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 Great West Real Estate, you can compare the effects of market volatilities on Blackrock and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Great West.

Diversification Opportunities for Blackrock and Great West

0.2

Correlation Coefficient

Blackrock  Great West

Modest diversification

The 3 months correlation between Blackrock and Great is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Sm Cap and Great West Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Real 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Real has no effect on the direction of Blackrock i.e., Blackrock and Great West go up and down completely randomly.

Pair Corralation between Blackrock and Great West

Assuming the 90 days horizon Blackrock Sm Cap is expected to generate 1.47 times more return on investment than Great West. However, Blackrock is 1.47 times more volatile than Great West Real Estate. It trades about 0.13 of its potential returns per unit of risk. Great West Real Estate is currently generating about -0.04 per unit of risk. If you would invest  2,478  in Blackrock Sm Cap on September 13, 2024 and sell it today you would earn a total of  247.00  from holding Blackrock Sm Cap or generate 9.97% return on investment over 90 days.

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

Blackrock Sm Cap  vs.  Great West Real Estate

Blackrock Sm Cap

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Sm Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Great West Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Great West Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Great West is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock and Great West

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

The idea behind Blackrock Sm Cap and Great West Real Estate 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.