Correlation Between Us Government and Blackrock Smid-cap

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

By analyzing existing cross correlation between Us Government Securities and Blackrock Smid Cap Growth, you can compare the effects of market volatilities on Us Government and Blackrock Smid-cap 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 Us Government with a short position of Blackrock Smid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Blackrock Smid-cap.

Diversification Opportunities for Us Government and Blackrock Smid-cap

-0.74

Correlation Coefficient

Us Government  Blackrock Smid-cap

Pay attention - limited upside

The 3 months correlation between CGTCX and Blackrock is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Securities and Blackrock Smid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Smid Cap and Us Government 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 Us Government Securities are associated (or correlated) with Blackrock Smid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Smid Cap has no effect on the direction of Us Government i.e., Us Government and Blackrock Smid-cap go up and down completely randomly.

Pair Corralation between Us Government and Blackrock Smid-cap

Assuming the 90 days horizon Us Government Securities is expected to under-perform the Blackrock Smid-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Us Government Securities is 3.51 times less risky than Blackrock Smid-cap. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Blackrock Smid Cap Growth is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,228  in Blackrock Smid Cap Growth on September 4, 2024 and sell it today you would earn a total of  206.00  from holding Blackrock Smid Cap Growth or generate 16.78% return on investment over 90 days.

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

Us Government Securities  vs.  Blackrock Smid Cap Growth

Us Government Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Smid Cap

Risk-Adjusted Performance

18 of 100

Solid

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

Pair Trading with Us Government and Blackrock Smid-cap

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

The idea behind Us Government Securities and Blackrock Smid Cap Growth 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.