Correlation Between Vista Oil and BlackRock
Can any of the company-specific risk be diversified away by investing in both Vista Oil and BlackRock 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 Vista Oil and BlackRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vista Oil Gas and BlackRock, you can compare the effects of market volatilities on Vista Oil and BlackRock 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 Vista Oil with a short position of BlackRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vista Oil and BlackRock.
Diversification Opportunities for Vista Oil and BlackRock
Poor diversification
The 3 months correlation between Vista and BlackRock is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vista Oil Gas and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock and Vista Oil 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 Vista Oil Gas are associated (or correlated) with BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Vista Oil i.e., Vista Oil and BlackRock go up and down completely randomly.
Pair Corralation between Vista Oil and BlackRock
Assuming the 90 days trading horizon Vista Oil Gas is expected to under-perform the BlackRock. In addition to that, Vista Oil is 1.87 times more volatile than BlackRock. It trades about -0.14 of its total potential returns per unit of risk. BlackRock is currently generating about -0.07 per unit of volatility. If you would invest 2,113,481 in BlackRock on September 23, 2024 and sell it today you would lose (39,981) from holding BlackRock or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vista Oil Gas vs. BlackRock
Performance |
| Timeline |
| Vista Oil Gas |
| BlackRock |
Vista Oil and BlackRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vista Oil and BlackRock
The main advantage of trading using opposite Vista Oil and BlackRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vista Oil position performs unexpectedly, BlackRock 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 BlackRock will offset losses from the drop in BlackRock's long position.The idea behind Vista Oil Gas and BlackRock 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.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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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