Correlation Between Blackrock World and Scandic Hotels

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Can any of the company-specific risk be diversified away by investing in both Blackrock World and Scandic Hotels 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 Scandic Hotels 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 Scandic Hotels Group, you can compare the effects of market volatilities on Blackrock World and Scandic Hotels 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 Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock World and Scandic Hotels.

Diversification Opportunities for Blackrock World and Scandic Hotels

BlackrockScandicDiversified AwayBlackrockScandicDiversified Away100%
0.38
  Correlation Coefficient

Weak diversification

The 3 months correlation between Blackrock and Scandic is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock World Mining and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group 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 Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Blackrock World i.e., Blackrock World and Scandic Hotels go up and down completely randomly.

Pair Corralation between Blackrock World and Scandic Hotels

Assuming the 90 days trading horizon Blackrock World Mining is expected to under-perform the Scandic Hotels. But the stock apears to be less risky and, when comparing its historical volatility, Blackrock World Mining is 1.17 times less risky than Scandic Hotels. The stock trades about -0.29 of its potential returns per unit of risk. The Scandic Hotels Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  6,541  in Scandic Hotels Group on September 25, 2024 and sell it today you would earn a total of  227.00  from holding Scandic Hotels Group or generate 3.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Blackrock World Mining  vs.  Scandic Hotels Group

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -505
JavaScript chart by amCharts 3.21.15BRWM 0RD7
       Timeline  
Blackrock World Mining 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Blackrock World Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec470480490500510520530540550
Scandic Hotels Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Scandic Hotels Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Scandic Hotels is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec6466687072

Blackrock World and Scandic Hotels Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.43-1.83-1.24-0.64-0.05070.521.111.72.29 0.060.080.100.120.140.160.18
JavaScript chart by amCharts 3.21.15BRWM 0RD7
       Returns  

Pair Trading with Blackrock World and Scandic Hotels

The main advantage of trading using opposite Blackrock World and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock World position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.
The idea behind Blackrock World Mining and Scandic Hotels 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.
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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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