Correlation Between Blackrock Health and Payden Floating

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

Diversification Opportunities for Blackrock Health and Payden Floating

-0.65

Correlation Coefficient

Blackrock Health  Payden Floating

Excellent diversification

The 3 months correlation between Blackrock and Payden is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Health Sciences and Payden Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden Floating Rate 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 Payden Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden Floating Rate has no effect on the direction of Blackrock Health i.e., Blackrock Health and Payden Floating go up and down completely randomly.

Pair Corralation between Blackrock Health and Payden Floating

Assuming the 90 days horizon Blackrock Health is expected to generate 6.72 times less return on investment than Payden Floating. In addition to that, Blackrock Health is 8.8 times more volatile than Payden Floating Rate. It trades about 0.01 of its total potential returns per unit of risk. Payden Floating Rate is currently generating about 0.35 per unit of volatility. If you would invest  896.00  in Payden Floating Rate on October 5, 2024 and sell it today you would earn a total of  79.00  from holding Payden Floating Rate or generate 8.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	60.35%
Values	Daily Returns

Blackrock Health Sciences  vs.  Payden Floating Rate

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.

Payden Floating Rate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Payden Floating Rate are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Payden Floating 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 Payden Floating

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

The idea behind Blackrock Health Sciences and Payden Floating Rate 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.