Correlation Between BlackRock and Ether Capital

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

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

Diversification Opportunities for BlackRock and Ether Capital

0.52

Correlation Coefficient

BlackRock  Ether Capital

Very weak diversification

The 3 months correlation between BlackRock and Ether is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Ether Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ether Capital and BlackRock 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 are associated (or correlated) with Ether Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ether Capital has no effect on the direction of BlackRock i.e., BlackRock and Ether Capital go up and down completely randomly.

Pair Corralation between BlackRock and Ether Capital

Considering the 90-day investment horizon BlackRock is expected to generate 0.27 times more return on investment than Ether Capital. However, BlackRock is 3.66 times less risky than Ether Capital. It trades about -0.31 of its potential returns per unit of risk. Ether Capital is currently generating about -0.14 per unit of risk. If you would invest  81,659  in BlackRock on February 2, 2024 and sell it today you would lose (6,501) from holding BlackRock or give up 7.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

BlackRock  vs.  Ether Capital

BlackRock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BlackRock is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Ether Capital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ether Capital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Ether Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock and Ether Capital

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

The idea behind BlackRock and Ether Capital 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.