Correlation Between Blackrock Enhanced and Rational Strategic

Can any of the company-specific risk be diversified away by investing in both Blackrock Enhanced and Rational 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 Blackrock Enhanced and Rational Strategic 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 Rational Strategic Allocation, you can compare the effects of market volatilities on Blackrock Enhanced and Rational 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 Blackrock Enhanced with a short position of Rational Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Enhanced and Rational Strategic.

Diversification Opportunities for Blackrock Enhanced and Rational Strategic

-0.06

Correlation Coefficient

Blackrock Enhanced  Rational Strategic

Good diversification

The 3 months correlation between Blackrock and RATIONAL is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Equity and Rational Strategic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Strategic 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 Rational Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Strategic has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Rational Strategic go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Rational Strategic

Considering the 90-day investment horizon Blackrock Enhanced Equity is expected to generate 0.44 times more return on investment than Rational Strategic. However, Blackrock Enhanced Equity is 2.29 times less risky than Rational Strategic. It trades about 0.13 of its potential returns per unit of risk. Rational Strategic Allocation is currently generating about -0.09 per unit of risk. If you would invest  813.00  in Blackrock Enhanced Equity on December 30, 2024 and sell it today you would earn a total of  51.00  from holding Blackrock Enhanced Equity or generate 6.27% return on investment over 90 days.

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

Blackrock Enhanced Equity  vs.  Rational Strategic Allocation

Blackrock Enhanced Equity

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Enhanced Equity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively weak fundamental indicators, Blackrock Enhanced may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Rational Strategic

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rational Strategic Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Blackrock Enhanced and Rational Strategic

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

The idea behind Blackrock Enhanced Equity and Rational Strategic Allocation 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.