Correlation Between BlackRock Global and FF Global

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

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

Diversification Opportunities for BlackRock Global and FF Global

0.49

Correlation Coefficient

BlackRock Global  FF Global

Very weak diversification

The 3 months correlation between BlackRock and FJ2P is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Global Funds and FF Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FF Global and BlackRock Global 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 Global Funds are associated (or correlated) with FF Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FF Global has no effect on the direction of BlackRock Global i.e., BlackRock Global and FF Global go up and down completely randomly.

Pair Corralation between BlackRock Global and FF Global

Assuming the 90 days trading horizon BlackRock Global is expected to generate 1.87 times less return on investment than FF Global. But when comparing it to its historical volatility, BlackRock Global Funds is 1.14 times less risky than FF Global. It trades about 0.08 of its potential returns per unit of risk. FF Global is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,011  in FF Global on October 25, 2024 and sell it today you would earn a total of  592.00  from holding FF Global or generate 8.44% return on investment over 90 days.

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

BlackRock Global Funds  vs.  FF Global

BlackRock Global Funds

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Global Funds are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady basic indicators, BlackRock Global is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

FF Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FF Global are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather weak technical and fundamental indicators, FF Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with BlackRock Global and FF Global

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

The idea behind BlackRock Global Funds and FF Global 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.