Correlation Between Blackrock Moderate and Templeton World

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

By analyzing existing cross correlation between Blackrock Moderate Prepared and Templeton World Fund, you can compare the effects of market volatilities on Blackrock Moderate and Templeton World 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 Moderate with a short position of Templeton World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Moderate and Templeton World.

Diversification Opportunities for Blackrock Moderate and Templeton World

0.75

Correlation Coefficient

Blackrock Moderate  Templeton World

Poor diversification

The 3 months correlation between Blackrock and Templeton is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Moderate Prepared and Templeton World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton World and Blackrock Moderate 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 Moderate Prepared are associated (or correlated) with Templeton World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton World has no effect on the direction of Blackrock Moderate i.e., Blackrock Moderate and Templeton World go up and down completely randomly.

Pair Corralation between Blackrock Moderate and Templeton World

Assuming the 90 days horizon Blackrock Moderate Prepared is expected to generate 0.37 times more return on investment than Templeton World. However, Blackrock Moderate Prepared is 2.74 times less risky than Templeton World. It trades about -0.04 of its potential returns per unit of risk. Templeton World Fund is currently generating about -0.08 per unit of risk. If you would invest  1,341  in Blackrock Moderate Prepared on September 26, 2024 and sell it today you would lose (14.00) from holding Blackrock Moderate Prepared or give up 1.04% of portfolio value over 90 days.

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

Blackrock Moderate Prepared  vs.  Templeton World Fund

Blackrock Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Templeton World

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton World Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Templeton World 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 Moderate and Templeton World

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

The idea behind Blackrock Moderate Prepared and Templeton World Fund 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 CEOs Directory module to screen CEOs from public companies around the world.