Correlation Between Blackrock and Transamerica Mid

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

By analyzing existing cross correlation between Blackrock Government Bond and Transamerica Mid Cap, you can compare the effects of market volatilities on Blackrock and Transamerica Mid 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 Transamerica Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Transamerica Mid.

Diversification Opportunities for Blackrock and Transamerica Mid

-0.08

Correlation Coefficient

Blackrock  Transamerica Mid

Good diversification

The 3 months correlation between Blackrock and Transamerica is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Government Bond and Transamerica Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Mid Cap 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 Government Bond are associated (or correlated) with Transamerica Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Mid Cap has no effect on the direction of Blackrock i.e., Blackrock and Transamerica Mid go up and down completely randomly.

Pair Corralation between Blackrock and Transamerica Mid

Assuming the 90 days horizon Blackrock Government Bond is expected to generate 0.22 times more return on investment than Transamerica Mid. However, Blackrock Government Bond is 4.54 times less risky than Transamerica Mid. It trades about -0.32 of its potential returns per unit of risk. Transamerica Mid Cap is currently generating about -0.36 per unit of risk. If you would invest  916.00  in Blackrock Government Bond on October 5, 2024 and sell it today you would lose (19.00) from holding Blackrock Government Bond or give up 2.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Blackrock Government Bond  vs.  Transamerica Mid Cap

Blackrock Government Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Transamerica Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transamerica Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Transamerica Mid 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 Transamerica Mid

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

The idea behind Blackrock Government Bond and Transamerica Mid Cap 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.