Correlation Between BlackRock and 3i Group
Can any of the company-specific risk be diversified away by investing in both BlackRock and 3i Group 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 and 3i Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock and 3i Group plc, you can compare the effects of market volatilities on BlackRock and 3i Group 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 with a short position of 3i Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and 3i Group.
Diversification Opportunities for BlackRock and 3i Group
Excellent diversification
The 3 months correlation between BlackRock and TGOPF is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and 3i Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3i Group plc and BlackRock 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 are associated (or correlated) with 3i Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3i Group plc has no effect on the direction of BlackRock i.e., BlackRock and 3i Group go up and down completely randomly.
Pair Corralation between BlackRock and 3i Group
Considering the 90-day investment horizon BlackRock is expected to under-perform the 3i Group. But the stock apears to be less risky and, when comparing its historical volatility, BlackRock is 1.44 times less risky than 3i Group. The stock trades about -0.07 of its potential returns per unit of risk. The 3i Group plc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,138 in 3i Group plc on January 25, 2024 and sell it today you would earn a total of 379.00 from holding 3i Group plc or generate 12.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock vs. 3i Group plc
Performance |
| Timeline |
| BlackRock |
| 3i Group plc |
BlackRock and 3i Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock and 3i Group
The main advantage of trading using opposite BlackRock and 3i Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock position performs unexpectedly, 3i Group 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 3i Group will offset losses from the drop in 3i Group's long position.The idea behind BlackRock and 3i Group plc 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.| 3i Group vs. Partners Group | 3i Group vs. Burford Capital | 3i Group vs. PennantPark Investment | 3i Group vs. 3i Group PLC |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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