Correlation Between BlackRock and Aluminum

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

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

Diversification Opportunities for BlackRock and Aluminum

-0.36

Correlation Coefficient

BlackRock  Aluminum

Very good diversification

The 3 months correlation between BlackRock and Aluminum is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum and BlackRock 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 are associated (or correlated) with Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum has no effect on the direction of BlackRock i.e., BlackRock and Aluminum go up and down completely randomly.

Pair Corralation between BlackRock and Aluminum

Considering the 90-day investment horizon BlackRock is expected to generate 0.22 times more return on investment than Aluminum. However, BlackRock is 4.48 times less risky than Aluminum. It trades about 0.14 of its potential returns per unit of risk. Aluminum of is currently generating about -0.02 per unit of risk. If you would invest  93,299  in BlackRock on September 22, 2024 and sell it today you would earn a total of  9,570  from holding BlackRock or generate 10.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

BlackRock  vs.  Aluminum of

BlackRock

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal essential indicators, BlackRock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aluminum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Aluminum is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BlackRock and Aluminum

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

The idea behind BlackRock and Aluminum of 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.