Correlation Between Edgewood Growth and Blackrock Focus

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

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

Diversification Opportunities for Edgewood Growth and Blackrock Focus

0.97

Correlation Coefficient

Edgewood Growth  Blackrock Focus

Almost no diversification

The 3 months correlation between Edgewood and Blackrock is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Edgewood Growth Fund and Blackrock Focus Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Focus Growth and Edgewood Growth 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 Edgewood Growth Fund are associated (or correlated) with Blackrock Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Focus Growth has no effect on the direction of Edgewood Growth i.e., Edgewood Growth and Blackrock Focus go up and down completely randomly.

Pair Corralation between Edgewood Growth and Blackrock Focus

Assuming the 90 days horizon Edgewood Growth is expected to generate 1.14 times less return on investment than Blackrock Focus. But when comparing it to its historical volatility, Edgewood Growth Fund is 1.17 times less risky than Blackrock Focus. It trades about 0.15 of its potential returns per unit of risk. Blackrock Focus Growth is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  705.00  in Blackrock Focus Growth on August 31, 2024 and sell it today you would earn a total of  70.00  from holding Blackrock Focus Growth or generate 9.93% return on investment over 90 days.

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

Edgewood Growth Fund  vs.  Blackrock Focus Growth

Edgewood Growth

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Edgewood Growth Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Edgewood Growth may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Blackrock Focus Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Focus Growth are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Blackrock Focus may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Edgewood Growth and Blackrock Focus

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

The idea behind Edgewood Growth Fund and Blackrock Focus 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.