Correlation Between Blackrock Enhanced and Performance Trust

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

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

Diversification Opportunities for Blackrock Enhanced and Performance Trust

-0.77

Correlation Coefficient

Blackrock Enhanced  Performance Trust

Pay attention - limited upside

The 3 months correlation between Blackrock and Performance is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Equity and Performance Trust Strategic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Trust and Blackrock Enhanced 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 Enhanced Equity are associated (or correlated) with Performance Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Trust has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Performance Trust go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Performance Trust

Considering the 90-day investment horizon Blackrock Enhanced Equity is expected to generate 2.61 times more return on investment than Performance Trust. However, Blackrock Enhanced is 2.61 times more volatile than Performance Trust Strategic. It trades about 0.13 of its potential returns per unit of risk. Performance Trust Strategic is currently generating about -0.04 per unit of risk. If you would invest  834.00  in Blackrock Enhanced Equity on September 5, 2024 and sell it today you would earn a total of  54.00  from holding Blackrock Enhanced Equity or generate 6.47% return on investment over 90 days.

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

Blackrock Enhanced Equity  vs.  Performance Trust Strategic

Blackrock Enhanced Equity

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Enhanced Equity are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively sluggish fundamental indicators, Blackrock Enhanced may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Performance Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Performance Trust Strategic has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Performance Trust 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 Enhanced and Performance Trust

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

The idea behind Blackrock Enhanced Equity and Performance Trust Strategic 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.