Correlation Between Blackrock Enhanced and Special Opportunities

Can any of the company-specific risk be diversified away by investing in both Blackrock Enhanced and Special Opportunities 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 Special Opportunities 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 Special Opportunities Closed, you can compare the effects of market volatilities on Blackrock Enhanced and Special Opportunities 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 Special Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Enhanced and Special Opportunities.

Diversification Opportunities for Blackrock Enhanced and Special Opportunities

0.91

Correlation Coefficient

Blackrock Enhanced  Special Opportunities

Almost no diversification

The 3 months correlation between Blackrock and Special is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Equity and Special Opportunities Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Special Opportunities 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 Special Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Special Opportunities has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Special Opportunities go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Special Opportunities

Considering the 90-day investment horizon Blackrock Enhanced is expected to generate 2.3 times less return on investment than Special Opportunities. In addition to that, Blackrock Enhanced is 1.17 times more volatile than Special Opportunities Closed. It trades about 0.05 of its total potential returns per unit of risk. Special Opportunities Closed is currently generating about 0.14 per unit of volatility. If you would invest  970.00  in Special Opportunities Closed on September 12, 2024 and sell it today you would earn a total of  573.00  from holding Special Opportunities Closed or generate 59.07% return on investment over 90 days.

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

Blackrock Enhanced Equity  vs.  Special Opportunities Closed

Blackrock Enhanced Equity

Risk-Adjusted Performance

9 of 100

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 steady fundamental indicators, Blackrock Enhanced is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Special Opportunities

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Special Opportunities Closed are ranked lower than 23 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather unsteady basic indicators, Special Opportunities exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock Enhanced and Special Opportunities

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

The idea behind Blackrock Enhanced Equity and Special Opportunities Closed 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.