Correlation Between Black Cat and Flagship Investments
Can any of the company-specific risk be diversified away by investing in both Black Cat and Flagship Investments 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 Black Cat and Flagship Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Cat Syndicate and Flagship Investments, you can compare the effects of market volatilities on Black Cat and Flagship Investments 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 Black Cat with a short position of Flagship Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Cat and Flagship Investments.
Diversification Opportunities for Black Cat and Flagship Investments
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Black and Flagship is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Black Cat Syndicate and Flagship Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flagship Investments and Black Cat 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 Black Cat Syndicate are associated (or correlated) with Flagship Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flagship Investments has no effect on the direction of Black Cat i.e., Black Cat and Flagship Investments go up and down completely randomly.
Pair Corralation between Black Cat and Flagship Investments
Assuming the 90 days trading horizon Black Cat Syndicate is expected to generate 3.36 times more return on investment than Flagship Investments. However, Black Cat is 3.36 times more volatile than Flagship Investments. It trades about 0.11 of its potential returns per unit of risk. Flagship Investments is currently generating about 0.08 per unit of risk. If you would invest 22.00 in Black Cat Syndicate on September 1, 2024 and sell it today you would earn a total of 49.00 from holding Black Cat Syndicate or generate 222.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.63% |
| Values | Daily Returns |
Black Cat Syndicate vs. Flagship Investments
Performance |
| Timeline |
| Black Cat Syndicate |
| Flagship Investments |
Black Cat and Flagship Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Cat and Flagship Investments
The main advantage of trading using opposite Black Cat and Flagship Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Cat position performs unexpectedly, Flagship Investments 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 Flagship Investments will offset losses from the drop in Flagship Investments' long position.| Black Cat vs. Northern Star Resources | Black Cat vs. Evolution Mining | Black Cat vs. Bluescope Steel | Black Cat vs. Sandfire Resources NL |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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