Correlation Between Blackrock World and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Blackrock World and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining, you can compare the effects of market volatilities on Blackrock World and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock World and Caledonia Mining.
Diversification Opportunities for Blackrock World and Caledonia Mining
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Blackrock and Caledonia is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock World Mining and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Blackrock World i.e., Blackrock World and Caledonia Mining go up and down completely randomly.
Pair Corralation between Blackrock World and Caledonia Mining
Assuming the 90 days trading horizon Blackrock World Mining is expected to generate 0.54 times more return on investment than Caledonia Mining. However, Blackrock World Mining is 1.85 times less risky than Caledonia Mining. It trades about -0.11 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.42 per unit of risk. If you would invest 53,117 in Blackrock World Mining on September 2, 2024 and sell it today you would lose (2,217) from holding Blackrock World Mining or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock World Mining vs. Caledonia Mining
Performance |
| Timeline |
| Blackrock World Mining |
| Caledonia Mining |
Blackrock World and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock World and Caledonia Mining
The main advantage of trading using opposite Blackrock World and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock World position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Blackrock World vs. Charter Communications Cl | Blackrock World vs. Gaztransport et Technigaz | Blackrock World vs. United Utilities Group | Blackrock World vs. Cairo Communication SpA |
| Caledonia Mining vs. Givaudan SA | Caledonia Mining vs. Antofagasta PLC | Caledonia Mining vs. Centamin PLC | Caledonia Mining vs. Atalaya Mining |
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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