Correlation Between Dana Large and Blackrock Balanced

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

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

Diversification Opportunities for Dana Large and Blackrock Balanced

0.86

Correlation Coefficient

Dana Large  Blackrock Balanced

Very poor diversification

The 3 months correlation between Dana and Blackrock is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Blackrock Balanced Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Balanced and Dana Large 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 Dana Large Cap are associated (or correlated) with Blackrock Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Balanced has no effect on the direction of Dana Large i.e., Dana Large and Blackrock Balanced go up and down completely randomly.

Pair Corralation between Dana Large and Blackrock Balanced

Assuming the 90 days horizon Dana Large Cap is expected to generate 1.5 times more return on investment than Blackrock Balanced. However, Dana Large is 1.5 times more volatile than Blackrock Balanced Capital. It trades about 0.1 of its potential returns per unit of risk. Blackrock Balanced Capital is currently generating about 0.15 per unit of risk. If you would invest  2,323  in Dana Large Cap on July 11, 2024 and sell it today you would earn a total of  247.00  from holding Dana Large Cap or generate 10.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.2%
Values	Daily Returns

Dana Large Cap  vs.  Blackrock Balanced Capital

Dana Large Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Large Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Dana Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Balanced

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Balanced Capital are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dana Large and Blackrock Balanced

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

The idea behind Dana Large Cap and Blackrock Balanced 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.