Correlation Between BlackRock and EZCORP

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

By analyzing existing cross correlation between BlackRock and EZCORP Inc, you can compare the effects of market volatilities on BlackRock and EZCORP 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 EZCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and EZCORP.

Diversification Opportunities for BlackRock and EZCORP

0.28

Correlation Coefficient

BlackRock  EZCORP

Modest diversification

The 3 months correlation between BlackRock and EZCORP is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and EZCORP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EZCORP Inc 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 EZCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EZCORP Inc has no effect on the direction of BlackRock i.e., BlackRock and EZCORP go up and down completely randomly.

Pair Corralation between BlackRock and EZCORP

Considering the 90-day investment horizon BlackRock is expected to generate 1.52 times less return on investment than EZCORP. But when comparing it to its historical volatility, BlackRock is 1.4 times less risky than EZCORP. It trades about 0.05 of its potential returns per unit of risk. EZCORP Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  878.00  in EZCORP Inc on January 20, 2024 and sell it today you would earn a total of  218.00  from holding EZCORP Inc or generate 24.83% return on investment over 90 days.

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

BlackRock  vs.  EZCORP Inc

BlackRock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, BlackRock is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

EZCORP Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EZCORP Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, EZCORP showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BlackRock and EZCORP

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

The idea behind BlackRock and EZCORP Inc 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.