Correlation Between Blackrock and Fundvantage Trust

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

Diversification Opportunities for Blackrock and Fundvantage Trust

0.9

Correlation Coefficient

Blackrock  Fundvantage Trust

Almost no diversification

The 3 months correlation between Blackrock and Fundvantage is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Hi Yld and Fundvantage Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fundvantage Trust 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 Fundvantage Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fundvantage Trust has no effect on the direction of Blackrock i.e., Blackrock and Fundvantage Trust go up and down completely randomly.

Pair Corralation between Blackrock and Fundvantage Trust

Assuming the 90 days horizon Blackrock is expected to generate 1.4 times less return on investment than Fundvantage Trust. But when comparing it to its historical volatility, Blackrock Hi Yld is 1.1 times less risky than Fundvantage Trust. It trades about 0.13 of its potential returns per unit of risk. Fundvantage Trust is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,015  in Fundvantage Trust on September 14, 2024 and sell it today you would earn a total of  18.00  from holding Fundvantage Trust or generate 1.77% return on investment over 90 days.

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

Blackrock Hi Yld  vs.  Fundvantage Trust

Blackrock Hi Yld

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Hi Yld are ranked lower than 9 (%) 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.

Fundvantage Trust

Risk-Adjusted Performance

12 of 100

Good

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

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

The idea behind Blackrock Hi Yld and Fundvantage Trust 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.