Correlation Between Blackrock Health and Sierra Tactical

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

Diversification Opportunities for Blackrock Health and Sierra Tactical

-0.44

Correlation Coefficient

Blackrock Health  Sierra Tactical

Very good diversification

The 3 months correlation between Blackrock and Sierra is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Health Sciences and Sierra Tactical Risk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Tactical Risk 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 Sierra Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Tactical Risk has no effect on the direction of Blackrock Health i.e., Blackrock Health and Sierra Tactical go up and down completely randomly.

Pair Corralation between Blackrock Health and Sierra Tactical

Assuming the 90 days horizon Blackrock Health Sciences is expected to under-perform the Sierra Tactical. In addition to that, Blackrock Health is 1.58 times more volatile than Sierra Tactical Risk. It trades about -0.09 of its total potential returns per unit of risk. Sierra Tactical Risk is currently generating about 0.15 per unit of volatility. If you would invest  2,791  in Sierra Tactical Risk on September 3, 2024 and sell it today you would earn a total of  128.00  from holding Sierra Tactical Risk or generate 4.59% return on investment over 90 days.

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

Blackrock Health Sciences  vs.  Sierra Tactical Risk

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 fairly strong basic indicators, Blackrock Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sierra Tactical Risk

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sierra Tactical Risk are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Sierra Tactical 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 Sierra Tactical

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

The idea behind Blackrock Health Sciences and Sierra Tactical Risk 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.