Correlation Between Blackrock International and Blackrock Enhanced

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

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

Diversification Opportunities for Blackrock International and Blackrock Enhanced

-0.28

Correlation Coefficient

Blackrock International  Blackrock Enhanced

Very good diversification

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

Pair Corralation between Blackrock International and Blackrock Enhanced

Considering the 90-day investment horizon Blackrock International Growth is expected to generate 1.05 times more return on investment than Blackrock Enhanced. However, Blackrock International is 1.05 times more volatile than Blackrock Enhanced Equity. It trades about 0.06 of its potential returns per unit of risk. Blackrock Enhanced Equity is currently generating about 0.05 per unit of risk. If you would invest  443.00  in Blackrock International Growth on September 5, 2024 and sell it today you would earn a total of  114.00  from holding Blackrock International Growth or generate 25.73% return on investment over 90 days.

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

Blackrock International Growth  vs.  Blackrock Enhanced Equity

Blackrock International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Blackrock International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Blackrock International and Blackrock Enhanced

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

The idea behind Blackrock International Growth and Blackrock Enhanced Equity 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.