Correlation Between Blackrock Health and Preferred Securities

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

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

Diversification Opportunities for Blackrock Health and Preferred Securities

0.32

Correlation Coefficient

Blackrock Health  Preferred Securities

Weak diversification

The 3 months correlation between Blackrock and Preferred is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Health Sciences and Preferred Securities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Preferred Securities and Blackrock Health 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 Health Sciences are associated (or correlated) with Preferred Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Preferred Securities has no effect on the direction of Blackrock Health i.e., Blackrock Health and Preferred Securities go up and down completely randomly.

Pair Corralation between Blackrock Health and Preferred Securities

Assuming the 90 days horizon Blackrock Health Sciences is expected to generate 4.37 times more return on investment than Preferred Securities. However, Blackrock Health is 4.37 times more volatile than Preferred Securities Fund. It trades about -0.07 of its potential returns per unit of risk. Preferred Securities Fund is currently generating about -0.33 per unit of risk. If you would invest  6,245  in Blackrock Health Sciences on October 12, 2024 and sell it today you would lose (71.00) from holding Blackrock Health Sciences or give up 1.14% of portfolio value over 90 days.

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

Blackrock Health Sciences  vs.  Preferred Securities Fund

Blackrock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Preferred Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Preferred Securities Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Preferred Securities 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 Health and Preferred Securities

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

The idea behind Blackrock Health Sciences and Preferred Securities 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.