Correlation Between Ab Select and Blackrock Strategic

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

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

Diversification Opportunities for Ab Select and Blackrock Strategic

0.65

Correlation Coefficient

Ab Select  Blackrock Strategic

Poor diversification

The 3 months correlation between AUUIX and Blackrock is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ab Select Equity and Blackrock Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Strategic and Ab Select 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 Ab Select Equity are associated (or correlated) with Blackrock Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Strategic has no effect on the direction of Ab Select i.e., Ab Select and Blackrock Strategic go up and down completely randomly.

Pair Corralation between Ab Select and Blackrock Strategic

Assuming the 90 days horizon Ab Select Equity is expected to under-perform the Blackrock Strategic. In addition to that, Ab Select is 5.8 times more volatile than Blackrock Strategic Municipal. It trades about -0.17 of its total potential returns per unit of risk. Blackrock Strategic Municipal is currently generating about -0.05 per unit of volatility. If you would invest  1,057  in Blackrock Strategic Municipal on October 9, 2024 and sell it today you would lose (5.00) from holding Blackrock Strategic Municipal or give up 0.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.5%
Values	Daily Returns

Ab Select Equity  vs.  Blackrock Strategic Municipal

Ab Select Equity

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Strategic Municipal has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Ab Select and Blackrock Strategic

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

The idea behind Ab Select Equity and Blackrock Strategic Municipal 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.