Correlation Between Fras Le and BlackRock

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

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

Diversification Opportunities for Fras Le and BlackRock

0.42

Correlation Coefficient

Fras Le  BlackRock

Very weak diversification

The 3 months correlation between Fras and BlackRock is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fras le SA and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and Fras Le 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 Fras le 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 Fras Le i.e., Fras Le and BlackRock go up and down completely randomly.

Pair Corralation between Fras Le and BlackRock

Assuming the 90 days trading horizon Fras Le is expected to generate 1.81 times less return on investment than BlackRock. In addition to that, Fras Le is 1.06 times more volatile than BlackRock. It trades about 0.08 of its total potential returns per unit of risk. BlackRock is currently generating about 0.16 per unit of volatility. If you would invest  5,536  in BlackRock on September 4, 2024 and sell it today you would earn a total of  3,812  from holding BlackRock or generate 68.86% return on investment over 90 days.

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

Fras le SA  vs.  BlackRock

Fras le SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fras le SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fras Le 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 Fras Le and BlackRock

The main advantage of trading using opposite Fras Le and BlackRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fras Le 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 Fras le 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.