Correlation Between Black Hills and Transportadora
Can any of the company-specific risk be diversified away by investing in both Black Hills and Transportadora 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 Transportadora into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hills and Transportadora de Gas, you can compare the effects of market volatilities on Black Hills and Transportadora 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 Transportadora. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hills and Transportadora.
Diversification Opportunities for Black Hills and Transportadora
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Black and Transportadora is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Black Hills and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de Gas 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Black Hills i.e., Black Hills and Transportadora go up and down completely randomly.
Pair Corralation between Black Hills and Transportadora
Considering the 90-day investment horizon Black Hills is expected to generate 3.55 times less return on investment than Transportadora. But when comparing it to its historical volatility, Black Hills is 2.06 times less risky than Transportadora. It trades about 0.24 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 2,244 in Transportadora de Gas on August 30, 2024 and sell it today you would earn a total of 675.00 from holding Transportadora de Gas or generate 30.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hills vs. Transportadora de Gas
Performance |
| Timeline |
| Black Hills |
| Transportadora de Gas |
Black Hills and Transportadora Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hills and Transportadora
The main advantage of trading using opposite Black Hills and Transportadora positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hills position performs unexpectedly, Transportadora 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 Transportadora will offset losses from the drop in Transportadora's long position.| Black Hills vs. NorthWestern | Black Hills vs. Avista | Black Hills vs. Otter Tail | Black Hills vs. Companhia Paranaense de |
| Transportadora vs. Petroleo Brasileiro Petrobras | Transportadora vs. Ecopetrol SA ADR | Transportadora vs. Petrleo Brasileiro SA | Transportadora vs. Equinor ASA ADR |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |