Correlation Between Altaba and Black Hills

Can any of the company-specific risk be diversified away by investing in both Altaba and Black Hills 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 Altaba and Black Hills into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Altaba Inc and Black Hills, you can compare the effects of market volatilities on Altaba and Black Hills 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 Altaba with a short position of Black Hills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altaba and Black Hills.

Diversification Opportunities for Altaba and Black Hills

0.0

Correlation Coefficient

Altaba  Black Hills

Pay attention - limited upside

The 3 months correlation between Altaba and Black is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Altaba Inc and Black Hills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Hills and Altaba 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 Altaba Inc are associated (or correlated) with Black Hills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Hills has no effect on the direction of Altaba i.e., Altaba and Black Hills go up and down completely randomly.

Pair Corralation between Altaba and Black Hills

If you would invest  5,239  in Black Hills on February 3, 2024 and sell it today you would earn a total of  359.00  from holding Black Hills or generate 6.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Altaba Inc  vs.  Black Hills

Altaba Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altaba Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Altaba is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Black Hills

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Black Hills are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady forward-looking signals, Black Hills demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altaba and Black Hills

The main advantage of trading using opposite Altaba and Black Hills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altaba position performs unexpectedly, Black Hills 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 Black Hills will offset losses from the drop in Black Hills' long position.

The idea behind Altaba Inc and Black Hills 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.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.