Correlation Between Black Stone and APA
Can any of the company-specific risk be diversified away by investing in both Black Stone and APA 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 Black Stone and APA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Stone Minerals and APA Corporation, you can compare the effects of market volatilities on Black Stone and APA 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 Black Stone with a short position of APA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Stone and APA.
Diversification Opportunities for Black Stone and APA
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Black and APA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Black Stone Minerals and APA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APA Corporation and Black Stone 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 Black Stone Minerals are associated (or correlated) with APA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APA Corporation has no effect on the direction of Black Stone i.e., Black Stone and APA go up and down completely randomly.
Pair Corralation between Black Stone and APA
Considering the 90-day investment horizon Black Stone Minerals is expected to generate 0.42 times more return on investment than APA. However, Black Stone Minerals is 2.4 times less risky than APA. It trades about 0.02 of its potential returns per unit of risk. APA Corporation is currently generating about -0.07 per unit of risk. If you would invest 1,506 in Black Stone Minerals on August 30, 2024 and sell it today you would earn a total of 33.00 from holding Black Stone Minerals or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Stone Minerals vs. APA Corp.
Performance |
| Timeline |
| Black Stone Minerals |
| APA Corporation |
Black Stone and APA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Stone and APA
The main advantage of trading using opposite Black Stone and APA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Stone position performs unexpectedly, APA 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 APA will offset losses from the drop in APA's long position.| Black Stone vs. Devon Energy | Black Stone vs. ConocoPhillips | Black Stone vs. Diamondback Energy | Black Stone vs. Occidental Petroleum |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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