Correlation Between EQT AB and BlackRock

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

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

Diversification Opportunities for EQT AB and BlackRock

-0.67

Correlation Coefficient

EQT AB  BlackRock

Excellent diversification

The 3 months correlation between EQT and BlackRock is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and EQT AB 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 EQT AB 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 EQT AB i.e., EQT AB and BlackRock go up and down completely randomly.

Pair Corralation between EQT AB and BlackRock

Assuming the 90 days horizon EQT AB is expected to generate 3.72 times less return on investment than BlackRock. In addition to that, EQT AB is 1.7 times more volatile than BlackRock. It trades about 0.04 of its total potential returns per unit of risk. BlackRock is currently generating about 0.26 per unit of volatility. If you would invest  79,567  in BlackRock on September 3, 2024 and sell it today you would earn a total of  18,083  from holding BlackRock or generate 22.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

EQT AB  vs.  BlackRock

EQT AB

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EQT AB are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, EQT AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BlackRock

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, BlackRock reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EQT AB and BlackRock

The main advantage of trading using opposite EQT AB and BlackRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT AB 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 EQT AB 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.