Correlation Between Total Return and Blackrock

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

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

Diversification Opportunities for Total Return and Blackrock

1.0

Correlation Coefficient

Total Return  Blackrock

No risk reduction

The 3 months correlation between Total and Blackrock is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Fund and Blackrock Bd Fd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Bd Fd and Total Return 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 Total Return Fund are associated (or correlated) with Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Bd Fd has no effect on the direction of Total Return i.e., Total Return and Blackrock go up and down completely randomly.

Pair Corralation between Total Return and Blackrock

Assuming the 90 days horizon Total Return Fund is expected to under-perform the Blackrock. But the mutual fund apears to be less risky and, when comparing its historical volatility, Total Return Fund is 1.02 times less risky than Blackrock. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Blackrock Bd Fd is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  1,005  in Blackrock Bd Fd on September 3, 2024 and sell it today you would lose (9.00) from holding Blackrock Bd Fd or give up 0.9% of portfolio value over 90 days.

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

Total Return Fund  vs.  Blackrock Bd Fd

Total Return

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Total Return Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Total Return is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Bd Fd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Bd Fd has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Total Return and Blackrock

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

The idea behind Total Return Fund and Blackrock Bd Fd 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.