Correlation Between Blackrock and Federated High

Can any of the company-specific risk be diversified away by investing in both Blackrock and Federated High 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 Federated High 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 Federated High Income, you can compare the effects of market volatilities on Blackrock and Federated High 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 Federated High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Federated High.

Diversification Opportunities for Blackrock and Federated High

0.9

Correlation Coefficient

Blackrock  Federated High

Almost no diversification

The 3 months correlation between Blackrock and Federated is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Hi Yld and Federated High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated High Income 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 Federated High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated High Income has no effect on the direction of Blackrock i.e., Blackrock and Federated High go up and down completely randomly.

Pair Corralation between Blackrock and Federated High

Assuming the 90 days horizon Blackrock Hi Yld is expected to generate 1.03 times more return on investment than Federated High. However, Blackrock is 1.03 times more volatile than Federated High Income. It trades about 0.16 of its potential returns per unit of risk. Federated High Income is currently generating about 0.16 per unit of risk. If you would invest  621.00  in Blackrock Hi Yld on August 31, 2024 and sell it today you would earn a total of  100.00  from holding Blackrock Hi Yld or generate 16.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.73%
Values	Daily Returns

Blackrock Hi Yld  vs.  Federated High Income

Blackrock Hi Yld

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Hi Yld are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. 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.

Federated High Income

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federated High Income are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated High 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 Federated High

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

The idea behind Blackrock Hi Yld and Federated High Income 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.