Correlation Between Blackrock Strategic and Blackrock Smid-cap

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

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

Diversification Opportunities for Blackrock Strategic and Blackrock Smid-cap

-0.36

Correlation Coefficient

Blackrock Strategic  Blackrock Smid-cap

Very good diversification

The 3 months correlation between BlackRock and Blackrock is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Strategic Municipal and Blackrock Smid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Smid Cap and Blackrock Strategic 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 Strategic Municipal are associated (or correlated) with Blackrock Smid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Smid Cap has no effect on the direction of Blackrock Strategic i.e., Blackrock Strategic and Blackrock Smid-cap go up and down completely randomly.

Pair Corralation between Blackrock Strategic and Blackrock Smid-cap

Assuming the 90 days horizon Blackrock Strategic is expected to generate 23.69 times less return on investment than Blackrock Smid-cap. But when comparing it to its historical volatility, Blackrock Strategic Municipal is 3.65 times less risky than Blackrock Smid-cap. It trades about 0.04 of its potential returns per unit of risk. Blackrock Smid Cap Growth is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,229  in Blackrock Smid Cap Growth on September 2, 2024 and sell it today you would earn a total of  209.00  from holding Blackrock Smid Cap Growth or generate 17.01% return on investment over 90 days.

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

Blackrock Strategic Municipal  vs.  Blackrock Smid Cap Growth

Blackrock Strategic

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Strategic Municipal are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Smid Cap

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Smid Cap Growth are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Blackrock Smid-cap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock Strategic and Blackrock Smid-cap

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

The idea behind Blackrock Strategic Municipal and Blackrock Smid Cap 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.