Correlation Between BlackRock MIT and Patria Investments

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

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

Diversification Opportunities for BlackRock MIT and Patria Investments

-0.56

Correlation Coefficient

BlackRock MIT  Patria Investments

Excellent diversification

The 3 months correlation between BlackRock and Patria is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock MIT II and Patria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments and BlackRock MIT 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 MIT II are associated (or correlated) with Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of BlackRock MIT i.e., BlackRock MIT and Patria Investments go up and down completely randomly.

Pair Corralation between BlackRock MIT and Patria Investments

Considering the 90-day investment horizon BlackRock MIT II is expected to under-perform the Patria Investments. But the stock apears to be less risky and, when comparing its historical volatility, BlackRock MIT II is 3.01 times less risky than Patria Investments. The stock trades about -0.04 of its potential returns per unit of risk. The Patria Investments is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,075  in Patria Investments on September 12, 2024 and sell it today you would earn a total of  202.00  from holding Patria Investments or generate 18.79% return on investment over 90 days.

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

BlackRock MIT II  vs.  Patria Investments

BlackRock MIT II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock MIT II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, BlackRock MIT is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Patria Investments

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Patria Investments showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock MIT and Patria Investments

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

The idea behind BlackRock MIT II and Patria Investments 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.