Correlation Between Coty and Blackrock Multi

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

By analyzing existing cross correlation between Coty Inc and Blackrock Multi Sector, you can compare the effects of market volatilities on Coty and Blackrock Multi 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 Coty with a short position of Blackrock Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and Blackrock Multi.

Diversification Opportunities for Coty and Blackrock Multi

-0.19

Correlation Coefficient

Coty  Blackrock Multi

Good diversification

The 3 months correlation between Coty and Blackrock is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and Blackrock Multi Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Multi Sector and Coty 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 Coty Inc are associated (or correlated) with Blackrock Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Multi Sector has no effect on the direction of Coty i.e., Coty and Blackrock Multi go up and down completely randomly.

Pair Corralation between Coty and Blackrock Multi

Given the investment horizon of 90 days Coty Inc is expected to under-perform the Blackrock Multi. In addition to that, Coty is 3.16 times more volatile than Blackrock Multi Sector. It trades about -0.16 of its total potential returns per unit of risk. Blackrock Multi Sector is currently generating about -0.17 per unit of volatility. If you would invest  1,557  in Blackrock Multi Sector on January 20, 2024 and sell it today you would lose (42.00) from holding Blackrock Multi Sector or give up 2.7% of portfolio value over 90 days.

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

Coty Inc  vs.  Blackrock Multi Sector

Coty Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coty Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Blackrock Multi Sector

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Multi Sector are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward indicators, Blackrock Multi is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Coty and Blackrock Multi

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

The idea behind Coty Inc and Blackrock Multi Sector 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.