Correlation Between BlackRock and TINC Comm

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

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

Diversification Opportunities for BlackRock and TINC Comm

-0.83

Correlation Coefficient

BlackRock  TINC Comm

Pay attention - limited upside

The 3 months correlation between BlackRock and TINC is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and TINC Comm VA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TINC Comm VA 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 TINC Comm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TINC Comm VA has no effect on the direction of BlackRock i.e., BlackRock and TINC Comm go up and down completely randomly.

Pair Corralation between BlackRock and TINC Comm

Assuming the 90 days trading horizon BlackRock is expected to generate 1.39 times more return on investment than TINC Comm. However, BlackRock is 1.39 times more volatile than TINC Comm VA. It trades about 0.28 of its potential returns per unit of risk. TINC Comm VA is currently generating about -0.1 per unit of risk. If you would invest  79,960  in BlackRock on September 12, 2024 and sell it today you would earn a total of  17,540  from holding BlackRock or generate 21.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	92.19%
Values	Daily Returns

BlackRock  vs.  TINC Comm VA

BlackRock

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, BlackRock reported solid returns over the last few months and may actually be approaching a breakup point.

TINC Comm VA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BlackRock and TINC Comm

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

The idea behind BlackRock and TINC Comm VA 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.