Correlation Between Black Hills and Old Republic
Can any of the company-specific risk be diversified away by investing in both Black Hills and Old Republic 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 Old Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and Old Republic International, you can compare the effects of market volatilities on Black Hills and Old Republic 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 Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Old Republic.
Diversification Opportunities for Black Hills and Old Republic
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Black and Old is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of Black Hills i.e., Black Hills and Old Republic go up and down completely randomly.
Pair Corralation between Black Hills and Old Republic
Considering the 90-day investment horizon Black Hills is expected to generate 5.68 times less return on investment than Old Republic. In addition to that, Black Hills is 1.2 times more volatile than Old Republic International. It trades about 0.02 of its total potential returns per unit of risk. Old Republic International is currently generating about 0.12 per unit of volatility. If you would invest 2,367 in Old Republic International on August 26, 2024 and sell it today you would earn a total of 1,493 from holding Old Republic International or generate 63.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. Old Republic International
Performance |
| Timeline |
| Black Hills |
| Old Republic Interna |
Black Hills and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and Old Republic
The main advantage of trading using opposite Black Hills and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
| Old Republic vs. Fiverr International | Old Republic vs. Pinterest | Old Republic vs. Upstart Holdings | Old Republic vs. Fastly Inc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |