Correlation Between BlackRock High and Avantis Core

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

By analyzing existing cross correlation between BlackRock High Yield and Avantis Core Municipal, you can compare the effects of market volatilities on BlackRock High and Avantis Core 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 High with a short position of Avantis Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock High and Avantis Core.

Diversification Opportunities for BlackRock High and Avantis Core

0.97

Correlation Coefficient

BlackRock High  Avantis Core

Almost no diversification

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

Pair Corralation between BlackRock High and Avantis Core

Given the investment horizon of 90 days BlackRock High Yield is expected to generate 1.56 times more return on investment than Avantis Core. However, BlackRock High is 1.56 times more volatile than Avantis Core Municipal. It trades about 0.14 of its potential returns per unit of risk. Avantis Core Municipal is currently generating about 0.09 per unit of risk. If you would invest  2,016  in BlackRock High Yield on September 14, 2024 and sell it today you would earn a total of  277.00  from holding BlackRock High Yield or generate 13.74% return on investment over 90 days.

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

BlackRock High Yield  vs.  Avantis Core Municipal

BlackRock High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock High Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, BlackRock High is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Avantis Core Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantis Core Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, Avantis Core is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BlackRock High and Avantis Core

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

The idea behind BlackRock High Yield and Avantis Core Municipal 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.