Correlation Between Environmental and Black Rock

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

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

Diversification Opportunities for Environmental and Black Rock

0.74

Correlation Coefficient

Environmental  Black Rock

Poor diversification

The 3 months correlation between Environmental and Black is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding The Environmental Group and Black Rock Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Rock Mining and Environmental 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 The Environmental Group are associated (or correlated) with Black Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Rock Mining has no effect on the direction of Environmental i.e., Environmental and Black Rock go up and down completely randomly.

Pair Corralation between Environmental and Black Rock

Assuming the 90 days trading horizon The Environmental Group is expected to generate 0.76 times more return on investment than Black Rock. However, The Environmental Group is 1.31 times less risky than Black Rock. It trades about -0.12 of its potential returns per unit of risk. Black Rock Mining is currently generating about -0.12 per unit of risk. If you would invest  41.00  in The Environmental Group on September 28, 2024 and sell it today you would lose (10.00) from holding The Environmental Group or give up 24.39% of portfolio value over 90 days.

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

The Environmental Group  vs.  Black Rock Mining

The Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Environmental Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Black Rock Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Black Rock Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Environmental and Black Rock

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

The idea behind The Environmental Group and Black Rock Mining 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.