Correlation Between Blackrock Strategic and The Arbitrage

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

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

Diversification Opportunities for Blackrock Strategic and The Arbitrage

0.02

Correlation Coefficient

Blackrock Strategic  The Arbitrage

Significant diversification

The 3 months correlation between Blackrock and The is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Strategic Opps and The Arbitrage Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Credit and Blackrock Strategic 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 Strategic Opps are associated (or correlated) with The Arbitrage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Credit has no effect on the direction of Blackrock Strategic i.e., Blackrock Strategic and The Arbitrage go up and down completely randomly.

Pair Corralation between Blackrock Strategic and The Arbitrage

Assuming the 90 days horizon Blackrock Strategic Opps is expected to under-perform the The Arbitrage. In addition to that, Blackrock Strategic is 2.61 times more volatile than The Arbitrage Credit. It trades about -0.5 of its total potential returns per unit of risk. The Arbitrage Credit is currently generating about -0.13 per unit of volatility. If you would invest  977.00  in The Arbitrage Credit on October 7, 2024 and sell it today you would lose (1.00) from holding The Arbitrage Credit or give up 0.1% of portfolio value over 90 days.

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

Blackrock Strategic Opps  vs.  The Arbitrage Credit

Blackrock Strategic Opps

Risk-Adjusted Performance

0 of 100

Very Weak

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

Arbitrage Credit

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in The Arbitrage Credit are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, The Arbitrage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Strategic and The Arbitrage

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

The idea behind Blackrock Strategic Opps and The Arbitrage Credit 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.