Correlation Between Blackrock Lifepath and Income Fund

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

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

Diversification Opportunities for Blackrock Lifepath and Income Fund

0.78

Correlation Coefficient

Blackrock Lifepath  Income Fund

Poor diversification

The 3 months correlation between Blackrock and Income is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Lifepath Dynamic and Income Fund Of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Income Fund and Blackrock Lifepath 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 Lifepath Dynamic are associated (or correlated) with Income Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Income Fund has no effect on the direction of Blackrock Lifepath i.e., Blackrock Lifepath and Income Fund go up and down completely randomly.

Pair Corralation between Blackrock Lifepath and Income Fund

Assuming the 90 days horizon Blackrock Lifepath is expected to generate 1.06 times less return on investment than Income Fund. In addition to that, Blackrock Lifepath is 1.17 times more volatile than Income Fund Of. It trades about 0.1 of its total potential returns per unit of risk. Income Fund Of is currently generating about 0.12 per unit of volatility. If you would invest  2,279  in Income Fund Of on September 14, 2024 and sell it today you would earn a total of  320.00  from holding Income Fund Of or generate 14.04% return on investment over 90 days.

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

Blackrock Lifepath Dynamic  vs.  Income Fund Of

Blackrock Lifepath

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Lifepath Dynamic are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Lifepath is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Income Fund

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Income Fund Of are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Income Fund 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 Lifepath and Income Fund

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

The idea behind Blackrock Lifepath Dynamic and Income Fund Of 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.