Correlation Between Short Duration and Blackrock Core

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

By analyzing existing cross correlation between Short Duration Inflation and Blackrock Core Bond, you can compare the effects of market volatilities on Short Duration and Blackrock Core 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 Short Duration with a short position of Blackrock Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Blackrock Core.

Diversification Opportunities for Short Duration and Blackrock Core

0.32

Correlation Coefficient

Short Duration  Blackrock Core

Weak diversification

The 3 months correlation between Short and Blackrock is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and Blackrock Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Core Bond and Short Duration 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 Short Duration Inflation are associated (or correlated) with Blackrock Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Core Bond has no effect on the direction of Short Duration i.e., Short Duration and Blackrock Core go up and down completely randomly.

Pair Corralation between Short Duration and Blackrock Core

Assuming the 90 days horizon Short Duration Inflation is expected to generate 0.36 times more return on investment than Blackrock Core. However, Short Duration Inflation is 2.75 times less risky than Blackrock Core. It trades about 0.36 of its potential returns per unit of risk. Blackrock Core Bond is currently generating about 0.06 per unit of risk. If you would invest  1,026  in Short Duration Inflation on October 25, 2024 and sell it today you would earn a total of  8.00  from holding Short Duration Inflation or generate 0.78% return on investment over 90 days.

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

Short Duration Inflation  vs.  Blackrock Core Bond

Short Duration Inflation

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Short Duration Inflation are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short Duration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Core Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Short Duration and Blackrock Core

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

The idea behind Short Duration Inflation and Blackrock Core Bond 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.