Correlation Between Regional Management and BlackRock Energy

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

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

Diversification Opportunities for Regional Management and BlackRock Energy

-0.37

Correlation Coefficient

Regional Management  BlackRock Energy

Very good diversification

The 3 months correlation between Regional and BlackRock is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Regional Management Corp and BlackRock Energy and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Energy and Regional Management 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 Regional Management Corp are associated (or correlated) with BlackRock Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Energy has no effect on the direction of Regional Management i.e., Regional Management and BlackRock Energy go up and down completely randomly.

Pair Corralation between Regional Management and BlackRock Energy

Allowing for the 90-day total investment horizon Regional Management Corp is expected to generate 3.22 times more return on investment than BlackRock Energy. However, Regional Management is 3.22 times more volatile than BlackRock Energy and. It trades about 0.12 of its potential returns per unit of risk. BlackRock Energy and is currently generating about 0.36 per unit of risk. If you would invest  2,866  in Regional Management Corp on August 30, 2024 and sell it today you would earn a total of  218.00  from holding Regional Management Corp or generate 7.61% return on investment over 90 days.

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

Regional Management Corp  vs.  BlackRock Energy and

Regional Management Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regional Management Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Regional Management is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BlackRock Energy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Energy and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, BlackRock Energy is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Regional Management and BlackRock Energy

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

The idea behind Regional Management Corp and BlackRock Energy and 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .