Correlation Between BlackRock Health and BlackRock Capital

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

By analyzing existing cross correlation between BlackRock Health Sciences and BlackRock Capital Allocation, you can compare the effects of market volatilities on BlackRock Health and BlackRock Capital 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 Health with a short position of BlackRock Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Health and BlackRock Capital.

Diversification Opportunities for BlackRock Health and BlackRock Capital

0.08

Correlation Coefficient

BlackRock Health  BlackRock Capital

Significant diversification

The 3 months correlation between BlackRock and BlackRock is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Health Sciences and BlackRock Capital Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Capital and BlackRock Health 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 Health Sciences are associated (or correlated) with BlackRock Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Capital has no effect on the direction of BlackRock Health i.e., BlackRock Health and BlackRock Capital go up and down completely randomly.

Pair Corralation between BlackRock Health and BlackRock Capital

Given the investment horizon of 90 days BlackRock Health is expected to generate 7.98 times less return on investment than BlackRock Capital. In addition to that, BlackRock Health is 1.27 times more volatile than BlackRock Capital Allocation. It trades about 0.01 of its total potential returns per unit of risk. BlackRock Capital Allocation is currently generating about 0.08 per unit of volatility. If you would invest  1,574  in BlackRock Capital Allocation on August 30, 2024 and sell it today you would earn a total of  44.00  from holding BlackRock Capital Allocation or generate 2.8% return on investment over 90 days.

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

BlackRock Health Sciences  vs.  BlackRock Capital Allocation

BlackRock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, BlackRock Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

BlackRock Capital

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Capital Allocation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock Capital is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BlackRock Health and BlackRock Capital

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

The idea behind BlackRock Health Sciences and BlackRock Capital Allocation 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.