Correlation Between Blackrock and Barrow Hanley

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

By analyzing existing cross correlation between Blackrock Hi Yld and Barrow Hanley Credit, you can compare the effects of market volatilities on Blackrock and Barrow Hanley 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 Barrow Hanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Barrow Hanley.

Diversification Opportunities for Blackrock and Barrow Hanley

0.66

Correlation Coefficient

Blackrock  Barrow Hanley

Poor diversification

The 3 months correlation between Blackrock and Barrow is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Hi Yld and Barrow Hanley Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrow Hanley Credit 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 Hi Yld are associated (or correlated) with Barrow Hanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrow Hanley Credit has no effect on the direction of Blackrock i.e., Blackrock and Barrow Hanley go up and down completely randomly.

Pair Corralation between Blackrock and Barrow Hanley

Assuming the 90 days horizon Blackrock Hi Yld is expected to under-perform the Barrow Hanley. In addition to that, Blackrock is 1.27 times more volatile than Barrow Hanley Credit. It trades about -0.08 of its total potential returns per unit of risk. Barrow Hanley Credit is currently generating about 0.18 per unit of volatility. If you would invest  942.00  in Barrow Hanley Credit on September 29, 2024 and sell it today you would earn a total of  16.00  from holding Barrow Hanley Credit or generate 1.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Blackrock Hi Yld  vs.  Barrow Hanley Credit

Blackrock Hi Yld

Risk-Adjusted Performance

0 of 100

Very Weak

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

Barrow Hanley Credit

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barrow Hanley Credit are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Barrow Hanley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock and Barrow Hanley

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

The idea behind Blackrock Hi Yld and Barrow Hanley Credit 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.