Correlation Between Black Rock and Resource Base

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

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

Diversification Opportunities for Black Rock and Resource Base

-0.51

Correlation Coefficient

Black Rock  Resource Base

Excellent diversification

The 3 months correlation between Black and Resource is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Resource Base in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resource Base and Black Rock 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 Black Rock Mining are associated (or correlated) with Resource Base. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resource Base has no effect on the direction of Black Rock i.e., Black Rock and Resource Base go up and down completely randomly.

Pair Corralation between Black Rock and Resource Base

Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Resource Base. But the stock apears to be less risky and, when comparing its historical volatility, Black Rock Mining is 1.15 times less risky than Resource Base. The stock trades about -0.12 of its potential returns per unit of risk. The Resource Base is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.70  in Resource Base on August 31, 2024 and sell it today you would earn a total of  0.50  from holding Resource Base or generate 13.51% return on investment over 90 days.

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

Black Rock Mining  vs.  Resource Base

Black Rock Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Rock Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Resource Base

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Resource Base are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Resource Base unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Black Rock and Resource Base

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

The idea behind Black Rock Mining and Resource Base 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.