Correlation Between Black Hills and Western Asset
Can any of the company-specific risk be diversified away by investing in both Black Hills and Western Asset 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 Hills and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and Western Asset Investment, you can compare the effects of market volatilities on Black Hills and Western Asset 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 Hills with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Western Asset.
Diversification Opportunities for Black Hills and Western Asset
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Black and Western is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Western Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Investment and Black Hills 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 Hills are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Investment has no effect on the direction of Black Hills i.e., Black Hills and Western Asset go up and down completely randomly.
Pair Corralation between Black Hills and Western Asset
Considering the 90-day investment horizon Black Hills is expected to generate 2.28 times more return on investment than Western Asset. However, Black Hills is 2.28 times more volatile than Western Asset Investment. It trades about 0.11 of its potential returns per unit of risk. Western Asset Investment is currently generating about 0.02 per unit of risk. If you would invest 5,513 in Black Hills on August 30, 2024 and sell it today you would earn a total of 881.00 from holding Black Hills or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. Western Asset Investment
Performance |
| Timeline |
| Black Hills |
| Western Asset Investment |
Black Hills and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and Western Asset
The main advantage of trading using opposite Black Hills and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
| Western Asset vs. ClimateRock Class A | Western Asset vs. CF Acquisition VII | Western Asset vs. DP Cap Acquisition |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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