Correlation Between FIXX Old and Black Diamond

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

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

Diversification Opportunities for FIXX Old and Black Diamond

0.13

Correlation Coefficient

FIXX Old  Black Diamond

Average diversification

The 3 months correlation between FIXX and Black is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding FIXX Old and Black Diamond Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Diamond Therap and FIXX Old 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 FIXX Old are associated (or correlated) with Black Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Diamond Therap has no effect on the direction of FIXX Old i.e., FIXX Old and Black Diamond go up and down completely randomly.

Pair Corralation between FIXX Old and Black Diamond

Given the investment horizon of 90 days FIXX Old is expected to generate 3.96 times more return on investment than Black Diamond. However, FIXX Old is 3.96 times more volatile than Black Diamond Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Black Diamond Therapeutics is currently generating about 0.05 per unit of risk. If you would invest  161.00  in FIXX Old on January 31, 2024 and sell it today you would lose (161.00) from holding FIXX Old or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.34%
Values	Daily Returns

FIXX Old  vs.  Black Diamond Therapeutics

FIXX Old

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days FIXX Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, FIXX Old showed solid returns over the last few months and may actually be approaching a breakup point.

Black Diamond Therap

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Black Diamond Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Black Diamond showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FIXX Old and Black Diamond

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

The idea behind FIXX Old and Black Diamond Therapeutics 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 Anywhere module to track or share privately all of your investments from the convenience of any device.