Correlation Between Investor and Blackrock International

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

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

Diversification Opportunities for Investor and Blackrock International

-0.21

Correlation Coefficient

Investor  Blackrock International

Very good diversification

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

Pair Corralation between Investor and Blackrock International

Assuming the 90 days horizon Investor AB is expected to under-perform the Blackrock International. In addition to that, Investor is 1.22 times more volatile than Blackrock International Growth. It trades about -0.04 of its total potential returns per unit of risk. Blackrock International Growth is currently generating about 0.01 per unit of volatility. If you would invest  560.00  in Blackrock International Growth on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Blackrock International Growth or generate 0.0% return on investment over 90 days.

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

Investor AB  vs.  Blackrock International Growth

Investor AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Blackrock International is not utilizing all of its potentials. The new stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Investor and Blackrock International

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

The idea behind Investor AB and Blackrock International Growth 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.