Correlation Between Blackrock High and Catalystmillburn

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

By analyzing existing cross correlation between Blackrock High Yield and Catalystmillburn Hedge Strategy, you can compare the effects of market volatilities on Blackrock High and Catalystmillburn 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 High with a short position of Catalystmillburn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock High and Catalystmillburn.

Diversification Opportunities for Blackrock High and Catalystmillburn

0.54

Correlation Coefficient

Blackrock High  Catalystmillburn

Very weak diversification

The 3 months correlation between Blackrock and Catalystmillburn is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock High Yield and Catalystmillburn Hedge Strateg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalystmillburn Hedge and Blackrock High 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 High Yield are associated (or correlated) with Catalystmillburn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalystmillburn Hedge has no effect on the direction of Blackrock High i.e., Blackrock High and Catalystmillburn go up and down completely randomly.

Pair Corralation between Blackrock High and Catalystmillburn

Assuming the 90 days horizon Blackrock High Yield is expected to under-perform the Catalystmillburn. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock High Yield is 3.1 times less risky than Catalystmillburn. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Catalystmillburn Hedge Strategy is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  3,761  in Catalystmillburn Hedge Strategy on September 24, 2024 and sell it today you would lose (8.00) from holding Catalystmillburn Hedge Strategy or give up 0.21% of portfolio value over 90 days.

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

Blackrock High Yield  vs.  Catalystmillburn Hedge Strateg

Blackrock High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock High Yield has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Catalystmillburn Hedge

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Hedge Strategy are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Catalystmillburn 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 High and Catalystmillburn

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

The idea behind Blackrock High Yield and Catalystmillburn Hedge Strategy 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.