Correlation Between Applied Finance and Blackrock Global

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

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

Diversification Opportunities for Applied Finance and Blackrock Global

0.62

Correlation Coefficient

Applied Finance  Blackrock Global

Poor diversification

The 3 months correlation between Applied and Blackrock is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Blackrock Global Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Global All and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Blackrock Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Global All has no effect on the direction of Applied Finance i.e., Applied Finance and Blackrock Global go up and down completely randomly.

Pair Corralation between Applied Finance and Blackrock Global

Assuming the 90 days horizon Applied Finance Explorer is expected to under-perform the Blackrock Global. In addition to that, Applied Finance is 1.78 times more volatile than Blackrock Global Allocation. It trades about -0.33 of its total potential returns per unit of risk. Blackrock Global Allocation is currently generating about -0.12 per unit of volatility. If you would invest  1,974  in Blackrock Global Allocation on September 22, 2024 and sell it today you would lose (29.00) from holding Blackrock Global Allocation or give up 1.47% of portfolio value over 90 days.

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

Applied Finance Explorer  vs.  Blackrock Global Allocation

Applied Finance Explorer

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Global All

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Applied Finance and Blackrock Global

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

The idea behind Applied Finance Explorer and Blackrock Global Allocation 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.