Correlation Between Blackrock World and LBG Media
Can any of the company-specific risk be diversified away by investing in both Blackrock World and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Blackrock World and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock World and LBG Media.
Diversification Opportunities for Blackrock World and LBG Media
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Blackrock and LBG is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock World Mining and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Blackrock World i.e., Blackrock World and LBG Media go up and down completely randomly.
Pair Corralation between Blackrock World and LBG Media
Assuming the 90 days trading horizon Blackrock World Mining is expected to under-perform the LBG Media. But the stock apears to be less risky and, when comparing its historical volatility, Blackrock World Mining is 2.34 times less risky than LBG Media. The stock trades about -0.22 of its potential returns per unit of risk. The LBG Media PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 13,100 in LBG Media PLC on September 22, 2024 and sell it today you would earn a total of 200.00 from holding LBG Media PLC or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock World Mining vs. LBG Media PLC
Performance |
| Timeline |
| Blackrock World Mining |
| LBG Media PLC |
Blackrock World and LBG Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock World and LBG Media
The main advantage of trading using opposite Blackrock World and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock World position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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