Correlation Between Black Diamond and BOC Aviation
Can any of the company-specific risk be diversified away by investing in both Black Diamond and BOC Aviation 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 Diamond and BOC Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Diamond Group and BOC Aviation Limited, you can compare the effects of market volatilities on Black Diamond and BOC Aviation 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 Diamond with a short position of BOC Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Diamond and BOC Aviation.
Diversification Opportunities for Black Diamond and BOC Aviation
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Black and BOC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Black Diamond Group and BOC Aviation Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOC Aviation Limited and Black Diamond 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 Diamond Group are associated (or correlated) with BOC Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOC Aviation Limited has no effect on the direction of Black Diamond i.e., Black Diamond and BOC Aviation go up and down completely randomly.
Pair Corralation between Black Diamond and BOC Aviation
Assuming the 90 days horizon Black Diamond is expected to generate 25.33 times less return on investment than BOC Aviation. But when comparing it to its historical volatility, Black Diamond Group is 15.9 times less risky than BOC Aviation. It trades about 0.08 of its potential returns per unit of risk. BOC Aviation Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 786.00 in BOC Aviation Limited on August 24, 2024 and sell it today you would lose (2.00) from holding BOC Aviation Limited or give up 0.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 88.92% |
| Values | Daily Returns |
Black Diamond Group vs. BOC Aviation Limited
Performance |
| Timeline |
| Black Diamond Group |
| BOC Aviation Limited |
Black Diamond and BOC Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Diamond and BOC Aviation
The main advantage of trading using opposite Black Diamond and BOC Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Diamond position performs unexpectedly, BOC Aviation 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 BOC Aviation will offset losses from the drop in BOC Aviation's long position.| Black Diamond vs. Element Solutions | Black Diamond vs. Orion Engineered Carbons | Black Diamond vs. Minerals Technologies | Black Diamond vs. Ingevity Corp |
| BOC Aviation vs. United Rentals | BOC Aviation vs. Ashtead Gro | BOC Aviation vs. Ashtead Group plc | BOC Aviation vs. AerCap Holdings NV |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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