Correlation Between Blackrock and Stone Harbor

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

By analyzing existing cross correlation between Blackrock Sm Cap and Stone Harbor High, you can compare the effects of market volatilities on Blackrock and Stone Harbor 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 Stone Harbor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Stone Harbor.

Diversification Opportunities for Blackrock and Stone Harbor

-0.64

Correlation Coefficient

Blackrock  Stone Harbor

Excellent diversification

The 3 months correlation between Blackrock and Stone is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Sm Cap and Stone Harbor High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stone Harbor High 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 Sm Cap are associated (or correlated) with Stone Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stone Harbor High has no effect on the direction of Blackrock i.e., Blackrock and Stone Harbor go up and down completely randomly.

Pair Corralation between Blackrock and Stone Harbor

Assuming the 90 days horizon Blackrock Sm Cap is expected to generate 1.96 times more return on investment than Stone Harbor. However, Blackrock is 1.96 times more volatile than Stone Harbor High. It trades about 0.05 of its potential returns per unit of risk. Stone Harbor High is currently generating about 0.0 per unit of risk. If you would invest  1,977  in Blackrock Sm Cap on September 14, 2024 and sell it today you would earn a total of  607.00  from holding Blackrock Sm Cap or generate 30.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	28.95%
Values	Daily Returns

Blackrock Sm Cap  vs.  Stone Harbor High

Blackrock Sm Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Sm Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Blackrock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Stone Harbor High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stone Harbor High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Stone Harbor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock and Stone Harbor

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

The idea behind Blackrock Sm Cap and Stone Harbor High 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.