Correlation Between BlackRock ESG and UL Solutions

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

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

Diversification Opportunities for BlackRock ESG and UL Solutions

0.5

Correlation Coefficient

BlackRock ESG  UL Solutions

Very weak diversification

The 3 months correlation between BlackRock and ULS is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ESG Capital and UL Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UL Solutions and BlackRock ESG 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 ESG Capital are associated (or correlated) with UL Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UL Solutions has no effect on the direction of BlackRock ESG i.e., BlackRock ESG and UL Solutions go up and down completely randomly.

Pair Corralation between BlackRock ESG and UL Solutions

Given the investment horizon of 90 days BlackRock ESG is expected to generate 2.2 times less return on investment than UL Solutions. But when comparing it to its historical volatility, BlackRock ESG Capital is 3.13 times less risky than UL Solutions. It trades about 0.21 of its potential returns per unit of risk. UL Solutions is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,985  in UL Solutions on May 5, 2025 and sell it today you would earn a total of  1,205  from holding UL Solutions or generate 20.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BlackRock ESG Capital  vs.  UL Solutions

BlackRock ESG Capital

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Capital are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BlackRock ESG may actually be approaching a critical reversion point that can send shares even higher in September 2025.

UL Solutions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UL Solutions are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, UL Solutions unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock ESG and UL Solutions

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

The idea behind BlackRock ESG Capital and UL Solutions 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.