Correlation Between BlackRock ESG and BlackRock Latin

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

By analyzing existing cross correlation between BlackRock ESG Multi Asset and BlackRock Latin American, you can compare the effects of market volatilities on BlackRock ESG and BlackRock Latin 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 ESG with a short position of BlackRock Latin. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock ESG and BlackRock Latin.

Diversification Opportunities for BlackRock ESG and BlackRock Latin

-0.84

Correlation Coefficient

BlackRock ESG  BlackRock Latin

Pay attention - limited upside

The 3 months correlation between BlackRock and BlackRock is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock ESG Multi Asset and BlackRock Latin American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Latin American and BlackRock ESG 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 ESG Multi Asset are associated (or correlated) with BlackRock Latin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Latin American has no effect on the direction of BlackRock ESG i.e., BlackRock ESG and BlackRock Latin go up and down completely randomly.

Pair Corralation between BlackRock ESG and BlackRock Latin

Assuming the 90 days trading horizon BlackRock ESG Multi Asset is expected to generate 0.39 times more return on investment than BlackRock Latin. However, BlackRock ESG Multi Asset is 2.58 times less risky than BlackRock Latin. It trades about 0.27 of its potential returns per unit of risk. BlackRock Latin American is currently generating about -0.12 per unit of risk. If you would invest  664.00  in BlackRock ESG Multi Asset on September 12, 2024 and sell it today you would earn a total of  61.00  from holding BlackRock ESG Multi Asset or generate 9.19% return on investment over 90 days.

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

BlackRock ESG Multi Asset  vs.  BlackRock Latin American

BlackRock ESG Multi

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Multi Asset are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, BlackRock ESG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BlackRock Latin American

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Latin American has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with BlackRock ESG and BlackRock Latin

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

The idea behind BlackRock ESG Multi Asset and BlackRock Latin American 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.