Correlation Between BRC and Black Hawk
Can any of the company-specific risk be diversified away by investing in both BRC and Black Hawk 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 BRC and Black Hawk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRC Inc and Black Hawk Acquisition, you can compare the effects of market volatilities on BRC and Black Hawk 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 BRC with a short position of Black Hawk. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and Black Hawk.
Diversification Opportunities for BRC and Black Hawk
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between BRC and Black is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and Black Hawk Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hawk Acquisition and BRC 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 BRC Inc are associated (or correlated) with Black Hawk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hawk Acquisition has no effect on the direction of BRC i.e., BRC and Black Hawk go up and down completely randomly.
Pair Corralation between BRC and Black Hawk
Given the investment horizon of 90 days BRC Inc is expected to under-perform the Black Hawk. In addition to that, BRC is 16.9 times more volatile than Black Hawk Acquisition. It trades about -0.33 of its total potential returns per unit of risk. Black Hawk Acquisition is currently generating about 0.1 per unit of volatility. If you would invest 1,061 in Black Hawk Acquisition on November 3, 2024 and sell it today you would earn a total of 3.00 from holding Black Hawk Acquisition or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRC Inc vs. Black Hawk Acquisition
Performance |
| Timeline |
| BRC Inc |
| Black Hawk Acquisition |
BRC and Black Hawk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRC and Black Hawk
The main advantage of trading using opposite BRC and Black Hawk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC position performs unexpectedly, Black Hawk 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 Black Hawk will offset losses from the drop in Black Hawk's long position.The idea behind BRC Inc and Black Hawk Acquisition 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.| Black Hawk vs. Omni Health | Black Hawk vs. Wingstop | Black Hawk vs. Cardinal Health | Black Hawk vs. Summit Hotel Properties |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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