Correlation Between Blckrk Lc and The Arbitrage

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

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

Diversification Opportunities for Blckrk Lc and The Arbitrage

0.24

Correlation Coefficient

Blckrk Lc  The Arbitrage

Modest diversification

The 3 months correlation between Blckrk and The is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Blckrk Lc Cr and The Arbitrage Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Arbitrage and Blckrk Lc 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 Blckrk Lc Cr 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 The Arbitrage has no effect on the direction of Blckrk Lc i.e., Blckrk Lc and The Arbitrage go up and down completely randomly.

Pair Corralation between Blckrk Lc and The Arbitrage

Assuming the 90 days horizon Blckrk Lc is expected to generate 2.77 times less return on investment than The Arbitrage. But when comparing it to its historical volatility, Blckrk Lc Cr is 1.08 times less risky than The Arbitrage. It trades about 0.04 of its potential returns per unit of risk. The Arbitrage Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,175  in The Arbitrage Fund on September 4, 2024 and sell it today you would earn a total of  16.00  from holding The Arbitrage Fund or generate 1.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Blckrk Lc Cr  vs.  The Arbitrage Fund

Blckrk Lc Cr

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blckrk Lc Cr are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blckrk Lc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

The Arbitrage

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Arbitrage Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental 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 Blckrk Lc and The Arbitrage

The main advantage of trading using opposite Blckrk Lc and The Arbitrage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blckrk Lc 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 Blckrk Lc Cr and The Arbitrage Fund 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.