Correlation Between Black Rock and Otto Energy
Can any of the company-specific risk be diversified away by investing in both Black Rock and Otto Energy 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 Rock and Otto Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Rock Mining and Otto Energy, you can compare the effects of market volatilities on Black Rock and Otto Energy 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 Rock with a short position of Otto Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Otto Energy.
Diversification Opportunities for Black Rock and Otto Energy
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Black and Otto is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Otto Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otto Energy and Black Rock 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 Rock Mining are associated (or correlated) with Otto Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otto Energy has no effect on the direction of Black Rock i.e., Black Rock and Otto Energy go up and down completely randomly.
Pair Corralation between Black Rock and Otto Energy
Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Otto Energy. But the stock apears to be less risky and, when comparing its historical volatility, Black Rock Mining is 1.11 times less risky than Otto Energy. The stock trades about -0.03 of its potential returns per unit of risk. The Otto Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1.30 in Otto Energy on September 2, 2024 and sell it today you would lose (0.10) from holding Otto Energy or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Rock Mining vs. Otto Energy
Performance |
| Timeline |
| Black Rock Mining |
| Otto Energy |
Black Rock and Otto Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Rock and Otto Energy
The main advantage of trading using opposite Black Rock and Otto Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Rock position performs unexpectedly, Otto Energy 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 Otto Energy will offset losses from the drop in Otto Energy's long position.| Black Rock vs. Northern Star Resources | Black Rock vs. Evolution Mining | Black Rock vs. Bluescope Steel | Black Rock vs. Sandfire Resources NL |
| Otto Energy vs. Ironbark Capital | Otto Energy vs. Black Rock Mining | Otto Energy vs. Hotel Property Investments | Otto Energy vs. Hawsons Iron |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |