Correlation Between Blackrock Exchange and Oil Equipment

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

By analyzing existing cross correlation between Blackrock Exchange Portfolio and Oil Equipment Services, you can compare the effects of market volatilities on Blackrock Exchange and Oil Equipment 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 Exchange with a short position of Oil Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Exchange and Oil Equipment.

Diversification Opportunities for Blackrock Exchange and Oil Equipment

0.38

Correlation Coefficient

Blackrock Exchange  Oil Equipment

Weak diversification

The 3 months correlation between Blackrock and Oil is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Exchange Portfolio and Oil Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil Equipment Services and Blackrock Exchange 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 Exchange Portfolio are associated (or correlated) with Oil Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil Equipment Services has no effect on the direction of Blackrock Exchange i.e., Blackrock Exchange and Oil Equipment go up and down completely randomly.

Pair Corralation between Blackrock Exchange and Oil Equipment

Assuming the 90 days horizon Blackrock Exchange Portfolio is expected to generate 0.24 times more return on investment than Oil Equipment. However, Blackrock Exchange Portfolio is 4.25 times less risky than Oil Equipment. It trades about 0.1 of its potential returns per unit of risk. Oil Equipment Services is currently generating about 0.01 per unit of risk. If you would invest  166,653  in Blackrock Exchange Portfolio on October 24, 2024 and sell it today you would earn a total of  68,425  from holding Blackrock Exchange Portfolio or generate 41.06% return on investment over 90 days.

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

Blackrock Exchange Portfolio  vs.  Oil Equipment Services

Blackrock Exchange

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Exchange Portfolio are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Blackrock Exchange is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oil Equipment Services

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Equipment Services are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Oil Equipment showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock Exchange and Oil Equipment

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

The idea behind Blackrock Exchange Portfolio and Oil Equipment Services 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.