Correlation Between Blackrock and Pax High

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Can any of the company-specific risk be diversified away by investing in both Blackrock and Pax High 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 and Pax High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Hi Yld and Pax High Yield, you can compare the effects of market volatilities on Blackrock and Pax High 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 with a short position of Pax High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Pax High.

Diversification Opportunities for Blackrock and Pax High

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Blackrock and Pax is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Hi Yld and Pax High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax High Yield and Blackrock 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 Hi Yld are associated (or correlated) with Pax High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax High Yield has no effect on the direction of Blackrock i.e., Blackrock and Pax High go up and down completely randomly.

Pair Corralation between Blackrock and Pax High

Assuming the 90 days horizon Blackrock Hi Yld is expected to generate 1.18 times more return on investment than Pax High. However, Blackrock is 1.18 times more volatile than Pax High Yield. It trades about 0.21 of its potential returns per unit of risk. Pax High Yield is currently generating about 0.23 per unit of risk. If you would invest  716.00  in Blackrock Hi Yld on September 13, 2024 and sell it today you would earn a total of  5.00  from holding Blackrock Hi Yld or generate 0.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Blackrock Hi Yld  vs.  Pax High Yield

 Performance 
       Timeline  
Blackrock Hi Yld 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Hi Yld are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Blackrock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Pax High Yield 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Pax High Yield are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Pax High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock and Pax High Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Blackrock and Pax High

The main advantage of trading using opposite Blackrock and Pax High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock position performs unexpectedly, Pax High 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 Pax High will offset losses from the drop in Pax High's long position.
The idea behind Blackrock Hi Yld and Pax High Yield 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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