Correlation Between BlackRock and Big Yellow

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Can any of the company-specific risk be diversified away by investing in both BlackRock and Big Yellow 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 BlackRock and Big Yellow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock and Big Yellow Group, you can compare the effects of market volatilities on BlackRock and Big Yellow 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 BlackRock with a short position of Big Yellow. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and Big Yellow.

Diversification Opportunities for BlackRock and Big Yellow

-0.75
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between BlackRock and Big is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Big Yellow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Yellow Group and BlackRock 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 BlackRock are associated (or correlated) with Big Yellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Yellow Group has no effect on the direction of BlackRock i.e., BlackRock and Big Yellow go up and down completely randomly.

Pair Corralation between BlackRock and Big Yellow

Considering the 90-day investment horizon BlackRock is expected to generate 0.49 times more return on investment than Big Yellow. However, BlackRock is 2.03 times less risky than Big Yellow. It trades about 0.12 of its potential returns per unit of risk. Big Yellow Group is currently generating about 0.02 per unit of risk. If you would invest  73,850  in BlackRock on September 4, 2024 and sell it today you would earn a total of  30,050  from holding BlackRock or generate 40.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy91.9%
ValuesDaily Returns

BlackRock  vs.  Big Yellow Group

 Performance 
       Timeline  
BlackRock 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, BlackRock disclosed solid returns over the last few months and may actually be approaching a breakup point.
Big Yellow Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Big Yellow Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

BlackRock and Big Yellow Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BlackRock and Big Yellow

The main advantage of trading using opposite BlackRock and Big Yellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock position performs unexpectedly, Big Yellow 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 Big Yellow will offset losses from the drop in Big Yellow's long position.
The idea behind BlackRock and Big Yellow Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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