Correlation Between OFS Credit and BlackRock

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

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

Diversification Opportunities for OFS Credit and BlackRock

0.54

Correlation Coefficient

OFS Credit  BlackRock

Very weak diversification

The 3 months correlation between OFS and BlackRock is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding OFS Credit Company, and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and OFS Credit 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 OFS Credit Company, 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 OFS Credit i.e., OFS Credit and BlackRock go up and down completely randomly.

Pair Corralation between OFS Credit and BlackRock

Assuming the 90 days horizon OFS Credit is expected to generate 3.02 times less return on investment than BlackRock. But when comparing it to its historical volatility, OFS Credit Company, is 4.01 times less risky than BlackRock. It trades about 0.15 of its potential returns per unit of risk. BlackRock is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  73,486  in BlackRock on October 5, 2024 and sell it today you would earn a total of  28,254  from holding BlackRock or generate 38.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	23.51%
Values	Daily Returns

OFS Credit Company,  vs.  BlackRock

OFS Credit ,

Risk-Adjusted Performance

10 of 100

OK

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

BlackRock

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, BlackRock may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with OFS Credit and BlackRock

The main advantage of trading using opposite OFS Credit and BlackRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OFS Credit 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 OFS Credit Company, 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.