Correlation Between Papaya Growth and BlackRock California

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

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

Diversification Opportunities for Papaya Growth and BlackRock California

-0.65

Correlation Coefficient

Papaya Growth  BlackRock California

Excellent diversification

The 3 months correlation between Papaya and BlackRock is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Papaya Growth Opportunity and BlackRock California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock California and Papaya Growth 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 Papaya Growth Opportunity are associated (or correlated) with BlackRock California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock California has no effect on the direction of Papaya Growth i.e., Papaya Growth and BlackRock California go up and down completely randomly.

Pair Corralation between Papaya Growth and BlackRock California

Given the investment horizon of 90 days Papaya Growth Opportunity is expected to generate 0.18 times more return on investment than BlackRock California. However, Papaya Growth Opportunity is 5.56 times less risky than BlackRock California. It trades about 0.09 of its potential returns per unit of risk. BlackRock California Municipal is currently generating about -0.01 per unit of risk. If you would invest  1,107  in Papaya Growth Opportunity on September 4, 2024 and sell it today you would earn a total of  6.00  from holding Papaya Growth Opportunity or generate 0.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Papaya Growth Opportunity  vs.  BlackRock California Municipal

Papaya Growth Opportunity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Papaya Growth Opportunity are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Papaya Growth is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BlackRock California

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock California Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, BlackRock California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Papaya Growth and BlackRock California

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

The idea behind Papaya Growth Opportunity and BlackRock California Municipal 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.