Correlation Between BlackRock Capital and State Street

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

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

Diversification Opportunities for BlackRock Capital and State Street

0.47

Correlation Coefficient

BlackRock Capital  State Street

Very weak diversification

The 3 months correlation between BlackRock and State is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Capital Allocation and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Corp and BlackRock Capital 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 Capital Allocation are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Corp has no effect on the direction of BlackRock Capital i.e., BlackRock Capital and State Street go up and down completely randomly.

Pair Corralation between BlackRock Capital and State Street

Given the investment horizon of 90 days BlackRock Capital Allocation is expected to under-perform the State Street. But the stock apears to be less risky and, when comparing its historical volatility, BlackRock Capital Allocation is 1.64 times less risky than State Street. The stock trades about -0.03 of its potential returns per unit of risk. The State Street Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  8,771  in State Street Corp on September 29, 2024 and sell it today you would earn a total of  1,087  from holding State Street Corp or generate 12.39% return on investment over 90 days.

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

BlackRock Capital Allocation  vs.  State Street Corp

BlackRock Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Capital Allocation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BlackRock Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

State Street Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, State Street may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with BlackRock Capital and State Street

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

The idea behind BlackRock Capital Allocation and State Street Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.