Correlation Between BlackRock and Metal Sky

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

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

Diversification Opportunities for BlackRock and Metal Sky

0.8

Correlation Coefficient

BlackRock  Metal Sky

Very poor diversification

The 3 months correlation between BlackRock and Metal is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star 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 Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of BlackRock i.e., BlackRock and Metal Sky go up and down completely randomly.

Pair Corralation between BlackRock and Metal Sky

Considering the 90-day investment horizon BlackRock is expected to generate 1.15 times more return on investment than Metal Sky. However, BlackRock is 1.15 times more volatile than Metal Sky Star. It trades about 0.28 of its potential returns per unit of risk. Metal Sky Star is currently generating about 0.08 per unit of risk. If you would invest  88,076  in BlackRock on September 12, 2024 and sell it today you would earn a total of  17,631  from holding BlackRock or generate 20.02% return on investment over 90 days.

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

BlackRock  vs.  Metal Sky Star

BlackRock

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, BlackRock disclosed solid returns over the last few months and may actually be approaching a breakup point.

Metal Sky Star

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Metal Sky is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock and Metal Sky

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

The idea behind BlackRock and Metal Sky Star 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 Stocks Directory module to find actively traded stocks across global markets.