Correlation Between Bright Rock and Blackrock
Can any of the company-specific risk be diversified away by investing in both Bright Rock and Blackrock 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 Bright Rock and Blackrock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Rock Mid and Blackrock Sm Cap, you can compare the effects of market volatilities on Bright Rock and Blackrock 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 Bright Rock with a short position of Blackrock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Rock and Blackrock.
Diversification Opportunities for Bright Rock and Blackrock
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bright and Blackrock is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bright Rock Mid and Blackrock Sm Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Sm Cap and Bright 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 Bright Rock Mid are associated (or correlated) with Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Sm Cap has no effect on the direction of Bright Rock i.e., Bright Rock and Blackrock go up and down completely randomly.
Pair Corralation between Bright Rock and Blackrock
Assuming the 90 days horizon Bright Rock is expected to generate 1.5 times less return on investment than Blackrock. But when comparing it to its historical volatility, Bright Rock Mid is 1.86 times less risky than Blackrock. It trades about 0.19 of its potential returns per unit of risk. Blackrock Sm Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,418 in Blackrock Sm Cap on September 12, 2024 and sell it today you would earn a total of 294.00 from holding Blackrock Sm Cap or generate 12.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Bright Rock Mid vs. Blackrock Sm Cap
Performance |
| Timeline |
| Bright Rock Mid |
| Blackrock Sm Cap |
Bright Rock and Blackrock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Rock and Blackrock
The main advantage of trading using opposite Bright Rock and Blackrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Rock position performs unexpectedly, Blackrock 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 Blackrock will offset losses from the drop in Blackrock's long position.| Bright Rock vs. Schwab Government Money | Bright Rock vs. Hsbc Government Money | Bright Rock vs. Dreyfus Government Cash | Bright Rock vs. Sit Government Securities |
| Blackrock vs. Blackrock Intern Index | Blackrock vs. Blackrock Sp 500 | Blackrock vs. Blackrock Bond Index | Blackrock vs. Blackrock Small Cap |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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