Correlation Between Federated Investors and BlackRock Capital

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

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

Diversification Opportunities for Federated Investors and BlackRock Capital

0.78

Correlation Coefficient

Federated Investors  BlackRock Capital

Poor diversification

The 3 months correlation between Federated and BlackRock is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Federated Investors B and BlackRock Capital Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Capital and Federated Investors 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 Federated Investors B are associated (or correlated) with BlackRock Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Capital has no effect on the direction of Federated Investors i.e., Federated Investors and BlackRock Capital go up and down completely randomly.

Pair Corralation between Federated Investors and BlackRock Capital

Considering the 90-day investment horizon Federated Investors B is expected to generate 1.61 times more return on investment than BlackRock Capital. However, Federated Investors is 1.61 times more volatile than BlackRock Capital Allocation. It trades about 0.32 of its potential returns per unit of risk. BlackRock Capital Allocation is currently generating about 0.19 per unit of risk. If you would invest  4,164  in Federated Investors B on May 6, 2025 and sell it today you would earn a total of  940.00  from holding Federated Investors B or generate 22.57% return on investment over 90 days.

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

Federated Investors B  vs.  BlackRock Capital Allocation

Federated Investors

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Investors B are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Federated Investors demonstrated solid returns over the last few months and may actually be approaching a breakup point.

BlackRock Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Capital Allocation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, BlackRock Capital may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Federated Investors and BlackRock Capital

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

The idea behind Federated Investors B and BlackRock Capital Allocation 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.