Correlation Between Bradespar and BlackRock

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

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

Diversification Opportunities for Bradespar and BlackRock

-0.21

Correlation Coefficient

Bradespar  BlackRock

Very good diversification

The 3 months correlation between Bradespar and BlackRock is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bradespar SA and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and Bradespar 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 Bradespar SA are associated (or correlated) with BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Bradespar i.e., Bradespar and BlackRock go up and down completely randomly.

Pair Corralation between Bradespar and BlackRock

Assuming the 90 days trading horizon Bradespar is expected to generate 22.48 times less return on investment than BlackRock. In addition to that, Bradespar is 1.13 times more volatile than BlackRock. It trades about 0.01 of its total potential returns per unit of risk. BlackRock is currently generating about 0.27 per unit of volatility. If you would invest  7,507  in BlackRock on September 4, 2024 and sell it today you would earn a total of  1,841  from holding BlackRock or generate 24.52% return on investment over 90 days.

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

Bradespar SA  vs.  BlackRock

Bradespar SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bradespar SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bradespar is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BlackRock

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BlackRock sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bradespar and BlackRock

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

The idea behind Bradespar SA and BlackRock 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.