Correlation Between Black Hawk and BRC
Can any of the company-specific risk be diversified away by investing in both Black Hawk and BRC 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 Hawk and BRC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Hawk Acquisition and BRC Inc, you can compare the effects of market volatilities on Black Hawk and BRC 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 Hawk with a short position of BRC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Hawk and BRC.
Diversification Opportunities for Black Hawk and BRC
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Black and BRC is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Black Hawk Acquisition and BRC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRC Inc and Black Hawk 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 Hawk Acquisition are associated (or correlated) with BRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRC Inc has no effect on the direction of Black Hawk i.e., Black Hawk and BRC go up and down completely randomly.
Pair Corralation between Black Hawk and BRC
Assuming the 90 days horizon Black Hawk Acquisition is expected to generate 0.34 times more return on investment than BRC. However, Black Hawk Acquisition is 2.93 times less risky than BRC. It trades about 0.03 of its potential returns per unit of risk. BRC Inc is currently generating about -0.07 per unit of risk. If you would invest 1,044 in Black Hawk Acquisition on October 24, 2024 and sell it today you would earn a total of 14.00 from holding Black Hawk Acquisition or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Hawk Acquisition vs. BRC Inc
Performance |
| Timeline |
| Black Hawk Acquisition |
| BRC Inc |
Black Hawk and BRC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Hawk and BRC
The main advantage of trading using opposite Black Hawk and BRC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Hawk position performs unexpectedly, BRC 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 BRC will offset losses from the drop in BRC's long position.| Black Hawk vs. BRC Inc | Black Hawk vs. Ambev SA ADR | Black Hawk vs. Keurig Dr Pepper | Black Hawk vs. Summit Materials |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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