Correlation Between Blackrock Short and Pax Small

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

By analyzing existing cross correlation between Blackrock Short Term Inflat Protected and Pax Small Cap, you can compare the effects of market volatilities on Blackrock Short and Pax Small 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 Short with a short position of Pax Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Short and Pax Small.

Diversification Opportunities for Blackrock Short and Pax Small

-0.1

Correlation Coefficient

Blackrock Short  Pax Small

Good diversification

The 3 months correlation between Blackrock and Pax is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Short Term Inflat Pr and Pax Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Small Cap and Blackrock Short 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 Short Term Inflat Protected are associated (or correlated) with Pax Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Small Cap has no effect on the direction of Blackrock Short i.e., Blackrock Short and Pax Small go up and down completely randomly.

Pair Corralation between Blackrock Short and Pax Small

Assuming the 90 days horizon Blackrock Short is expected to generate 4.11 times less return on investment than Pax Small. But when comparing it to its historical volatility, Blackrock Short Term Inflat Protected is 10.08 times less risky than Pax Small. It trades about 0.17 of its potential returns per unit of risk. Pax Small Cap is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,896  in Pax Small Cap on September 13, 2024 and sell it today you would earn a total of  23.00  from holding Pax Small Cap or generate 1.21% return on investment over 90 days.

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

Blackrock Short Term Inflat Pr  vs.  Pax Small Cap

Blackrock Short Term

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Short Term Inflat Protected are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pax Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pax Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pax Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock Short and Pax Small

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

The idea behind Blackrock Short Term Inflat Protected and Pax Small Cap 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.