Correlation Between Blackrock Enhanced and Wesmark Tactical

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

By analyzing existing cross correlation between Blackrock Enhanced Capital and Wesmark Tactical Opportunity, you can compare the effects of market volatilities on Blackrock Enhanced and Wesmark Tactical 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 Enhanced with a short position of Wesmark Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Enhanced and Wesmark Tactical.

Diversification Opportunities for Blackrock Enhanced and Wesmark Tactical

0.8

Correlation Coefficient

Blackrock Enhanced  Wesmark Tactical

Very poor diversification

The 3 months correlation between Blackrock and Wesmark is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Capital and Wesmark Tactical Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Tactical Opp and Blackrock Enhanced 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 Enhanced Capital are associated (or correlated) with Wesmark Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Tactical Opp has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Wesmark Tactical go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Wesmark Tactical

Considering the 90-day investment horizon Blackrock Enhanced Capital is expected to generate 1.45 times more return on investment than Wesmark Tactical. However, Blackrock Enhanced is 1.45 times more volatile than Wesmark Tactical Opportunity. It trades about 0.17 of its potential returns per unit of risk. Wesmark Tactical Opportunity is currently generating about 0.03 per unit of risk. If you would invest  1,910  in Blackrock Enhanced Capital on September 14, 2024 and sell it today you would earn a total of  110.00  from holding Blackrock Enhanced Capital or generate 5.76% return on investment over 90 days.

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

Blackrock Enhanced Capital  vs.  Wesmark Tactical Opportunity

Blackrock Enhanced

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Enhanced Capital are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong forward indicators, Blackrock Enhanced is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Wesmark Tactical Opp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wesmark Tactical Opportunity are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Wesmark Tactical 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 Enhanced and Wesmark Tactical

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

The idea behind Blackrock Enhanced Capital and Wesmark Tactical Opportunity 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.