Correlation Between Blackrock World and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Blackrock World and Cairn Homes 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 Cairn Homes 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 Cairn Homes PLC, you can compare the effects of market volatilities on Blackrock World and Cairn Homes 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 Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock World and Cairn Homes.
Diversification Opportunities for Blackrock World and Cairn Homes
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Blackrock and Cairn is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock World Mining and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC 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 Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Blackrock World i.e., Blackrock World and Cairn Homes go up and down completely randomly.
Pair Corralation between Blackrock World and Cairn Homes
Assuming the 90 days trading horizon Blackrock World Mining is expected to under-perform the Cairn Homes. But the stock apears to be less risky and, when comparing its historical volatility, Blackrock World Mining is 1.08 times less risky than Cairn Homes. The stock trades about -0.02 of its potential returns per unit of risk. The Cairn Homes PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,000 in Cairn Homes PLC on September 19, 2024 and sell it today you would earn a total of 10,060 from holding Cairn Homes PLC or generate 111.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Blackrock World Mining vs. Cairn Homes PLC
Performance |
| Timeline |
| Blackrock World Mining |
| Cairn Homes PLC |
Blackrock World and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock World and Cairn Homes
The main advantage of trading using opposite Blackrock World and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock World position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Blackrock World vs. Catalyst Media Group | Blackrock World vs. CATLIN GROUP | Blackrock World vs. Tamburi Investment Partners | Blackrock World vs. Magnora ASA |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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