Correlation Between BlackRock Energy and REX VolMAXX

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

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

Diversification Opportunities for BlackRock Energy and REX VolMAXX

0.69

Correlation Coefficient

BlackRock Energy  REX VolMAXX

Poor diversification

The 3 months correlation between BlackRock and REX is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Energy and and REX VolMAXX Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX VolMAXX Long and BlackRock Energy 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 Energy and are associated (or correlated) with REX VolMAXX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX VolMAXX Long has no effect on the direction of BlackRock Energy i.e., BlackRock Energy and REX VolMAXX go up and down completely randomly.

Pair Corralation between BlackRock Energy and REX VolMAXX

Considering the 90-day investment horizon BlackRock Energy and is expected to generate 1.1 times more return on investment than REX VolMAXX. However, BlackRock Energy is 1.1 times more volatile than REX VolMAXX Long. It trades about 0.17 of its potential returns per unit of risk. REX VolMAXX Long is currently generating about 0.14 per unit of risk. If you would invest  1,207  in BlackRock Energy and on February 27, 2024 and sell it today you would earn a total of  101.00  from holding BlackRock Energy and or generate 8.37% return on investment over 90 days.

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

BlackRock Energy and  vs.  REX VolMAXX Long

BlackRock Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Energy and are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain technical and fundamental indicators, BlackRock Energy may actually be approaching a critical reversion point that can send shares even higher in June 2024.

REX VolMAXX Long

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in REX VolMAXX Long are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, REX VolMAXX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock Energy and REX VolMAXX

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

The idea behind BlackRock Energy and and REX VolMAXX Long 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.