Correlation Between NOV and BlackRock

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

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

Diversification Opportunities for NOV and BlackRock

0.37

Correlation Coefficient

NOV  BlackRock

Weak diversification

The 3 months correlation between NOV and BlackRock is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding NOV Inc and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and NOV 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 NOV Inc 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 NOV i.e., NOV and BlackRock go up and down completely randomly.

Pair Corralation between NOV and BlackRock

Assuming the 90 days trading horizon NOV Inc is expected to generate 0.08 times more return on investment than BlackRock. However, NOV Inc is 12.02 times less risky than BlackRock. It trades about 0.22 of its potential returns per unit of risk. BlackRock is currently generating about -0.09 per unit of risk. If you would invest  32,092  in NOV Inc on September 24, 2024 and sell it today you would earn a total of  152.00  from holding NOV Inc or generate 0.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

NOV Inc  vs.  BlackRock

NOV Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NOV Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, NOV is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BlackRock

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BlackRock showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NOV and BlackRock

The main advantage of trading using opposite NOV and BlackRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOV 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 NOV Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.