Correlation Between Blackrock World and AES Corp
Can any of the company-specific risk be diversified away by investing in both Blackrock World and AES Corp 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 World and AES Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock World Mining and AES Corp, you can compare the effects of market volatilities on Blackrock World and AES Corp 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 World with a short position of AES Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock World and AES Corp.
Diversification Opportunities for Blackrock World and AES Corp
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Blackrock and AES is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock World Mining and AES Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES Corp and Blackrock World 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 World Mining are associated (or correlated) with AES Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES Corp has no effect on the direction of Blackrock World i.e., Blackrock World and AES Corp go up and down completely randomly.
Pair Corralation between Blackrock World and AES Corp
Assuming the 90 days trading horizon Blackrock World Mining is expected to generate 0.67 times more return on investment than AES Corp. However, Blackrock World Mining is 1.5 times less risky than AES Corp. It trades about -0.07 of its potential returns per unit of risk. AES Corp is currently generating about -0.23 per unit of risk. If you would invest 52,920 in Blackrock World Mining on September 5, 2024 and sell it today you would lose (1,620) from holding Blackrock World Mining or give up 3.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock World Mining vs. AES Corp
Performance |
| Timeline |
| Blackrock World Mining |
| AES Corp |
Blackrock World and AES Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock World and AES Corp
The main advantage of trading using opposite Blackrock World and AES Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock World position performs unexpectedly, AES Corp 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 AES Corp will offset losses from the drop in AES Corp's long position.| Blackrock World vs. Bell Food Group | Blackrock World vs. Central Asia Metals | Blackrock World vs. GoldMining | Blackrock World vs. Edita Food Industries |
| AES Corp vs. Blackrock World Mining | AES Corp vs. JLEN Environmental Assets | AES Corp vs. Greenroc Mining PLC | AES Corp vs. Ironveld Plc |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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