Correlation Between Blackrock Enhanced and Patria Investments

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

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

Diversification Opportunities for Blackrock Enhanced and Patria Investments

0.83

Correlation Coefficient

Blackrock Enhanced  Patria Investments

Very poor diversification

The 3 months correlation between Blackrock and Patria is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Equity and Patria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patria Investments and Blackrock Enhanced 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 Enhanced Equity are associated (or correlated) with Patria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patria Investments has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Patria Investments go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Patria Investments

Considering the 90-day investment horizon Blackrock Enhanced Equity is expected to generate 0.51 times more return on investment than Patria Investments. However, Blackrock Enhanced Equity is 1.98 times less risky than Patria Investments. It trades about 0.05 of its potential returns per unit of risk. Patria Investments is currently generating about 0.01 per unit of risk. If you would invest  744.00  in Blackrock Enhanced Equity on September 5, 2024 and sell it today you would earn a total of  148.00  from holding Blackrock Enhanced Equity or generate 19.89% return on investment over 90 days.

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

Blackrock Enhanced Equity  vs.  Patria Investments

Blackrock Enhanced Equity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Enhanced Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively fragile fundamental indicators, Blackrock Enhanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Patria Investments

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Patria Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Patria Investments may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock Enhanced and Patria Investments

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

The idea behind Blackrock Enhanced Equity and Patria Investments 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.