Correlation Between BlackRock and Invictus Energy

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

By analyzing existing cross correlation between BlackRock and Invictus Energy Limited, you can compare the effects of market volatilities on BlackRock and Invictus Energy 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 Invictus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and Invictus Energy.

Diversification Opportunities for BlackRock and Invictus Energy

-0.71

Correlation Coefficient

BlackRock  Invictus Energy

Pay attention - limited upside

The 3 months correlation between BlackRock and Invictus is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Invictus Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invictus Energy 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 Invictus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invictus Energy has no effect on the direction of BlackRock i.e., BlackRock and Invictus Energy go up and down completely randomly.

Pair Corralation between BlackRock and Invictus Energy

Considering the 90-day investment horizon BlackRock is expected to generate 0.13 times more return on investment than Invictus Energy. However, BlackRock is 7.78 times less risky than Invictus Energy. It trades about -0.01 of its potential returns per unit of risk. Invictus Energy Limited is currently generating about -0.05 per unit of risk. If you would invest  103,135  in BlackRock on September 23, 2024 and sell it today you would lose (266.00) from holding BlackRock or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

BlackRock  vs.  Invictus Energy Limited

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 weak essential indicators, BlackRock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Invictus Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invictus Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with BlackRock and Invictus Energy

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

The idea behind BlackRock and Invictus Energy Limited 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.