Correlation Between Blackrock Global and Ariel Focus

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

By analyzing existing cross correlation between Blackrock Global Longshort and Ariel Focus Fund, you can compare the effects of market volatilities on Blackrock Global and Ariel Focus 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 Global with a short position of Ariel Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Global and Ariel Focus.

Diversification Opportunities for Blackrock Global and Ariel Focus

0.73

Correlation Coefficient

Blackrock Global  Ariel Focus

Poor diversification

The 3 months correlation between Blackrock and Ariel is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Global Longshort and Ariel Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ariel Focus Fund and Blackrock Global 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 Global Longshort are associated (or correlated) with Ariel Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ariel Focus Fund has no effect on the direction of Blackrock Global i.e., Blackrock Global and Ariel Focus go up and down completely randomly.

Pair Corralation between Blackrock Global and Ariel Focus

Assuming the 90 days horizon Blackrock Global Longshort is expected to generate about the same return on investment as Ariel Focus Fund. But, Blackrock Global Longshort is 9.44 times less risky than Ariel Focus. It trades about 0.28 of its potential returns per unit of risk. Ariel Focus Fund is currently generating about 0.03 per unit of risk. If you would invest  1,430  in Ariel Focus Fund on October 11, 2024 and sell it today you would earn a total of  195.00  from holding Ariel Focus Fund or generate 13.64% return on investment over 90 days.

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

Blackrock Global Longshort  vs.  Ariel Focus Fund

Blackrock Global Lon

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Global Longshort are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Blackrock Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ariel Focus Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ariel Focus Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Ariel Focus 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 Global and Ariel Focus

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

The idea behind Blackrock Global Longshort and Ariel Focus 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.