Correlation Between MEC and BLK

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

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

Diversification Opportunities for MEC and BLK

0.0

Correlation Coefficient

MEC  BLK

Pay attention - limited upside

The 3 months correlation between MEC and BLK is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MEC and BLK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLK and MEC 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 MEC are associated (or correlated) with BLK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLK has no effect on the direction of MEC i.e., MEC and BLK go up and down completely randomly.

Pair Corralation between MEC and BLK

If you would invest  1.72  in BLK on September 1, 2024 and sell it today you would earn a total of  1.17  from holding BLK or generate 68.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

MEC  vs.  BLK

MEC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, MEC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BLK

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BLK are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, BLK exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MEC and BLK

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

The idea behind MEC and BLK 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.