Correlation Between Blackrock High and Oakmark Select

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

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

Diversification Opportunities for Blackrock High and Oakmark Select

0.69

Correlation Coefficient

Blackrock High  Oakmark Select

Poor diversification

The 3 months correlation between Blackrock and Oakmark is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock High Yield and Oakmark Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Select and Blackrock High 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 High Yield are associated (or correlated) with Oakmark Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Select has no effect on the direction of Blackrock High i.e., Blackrock High and Oakmark Select go up and down completely randomly.

Pair Corralation between Blackrock High and Oakmark Select

Assuming the 90 days horizon Blackrock High is expected to generate 9.76 times less return on investment than Oakmark Select. But when comparing it to its historical volatility, Blackrock High Yield is 6.15 times less risky than Oakmark Select. It trades about 0.15 of its potential returns per unit of risk. Oakmark Select is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  7,418  in Oakmark Select on September 4, 2024 and sell it today you would earn a total of  1,051  from holding Oakmark Select or generate 14.17% return on investment over 90 days.

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

Blackrock High Yield  vs.  Oakmark Select

Blackrock High Yield

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock High Yield are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oakmark Select

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Select are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Oakmark Select showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock High and Oakmark Select

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

The idea behind Blackrock High Yield and Oakmark Select 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.