Correlation Between Blackrock Moderate and Franklin Adjustable

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

By analyzing existing cross correlation between Blackrock Moderate Prepared and Franklin Adjustable Government, you can compare the effects of market volatilities on Blackrock Moderate and Franklin Adjustable 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 Moderate with a short position of Franklin Adjustable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Moderate and Franklin Adjustable.

Diversification Opportunities for Blackrock Moderate and Franklin Adjustable

0.3

Correlation Coefficient

Blackrock Moderate  Franklin Adjustable

Weak diversification

The 3 months correlation between Blackrock and Franklin is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Moderate Prepared and Franklin Adjustable Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Adjustable and Blackrock Moderate 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 Moderate Prepared are associated (or correlated) with Franklin Adjustable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Adjustable has no effect on the direction of Blackrock Moderate i.e., Blackrock Moderate and Franklin Adjustable go up and down completely randomly.

Pair Corralation between Blackrock Moderate and Franklin Adjustable

Assuming the 90 days horizon Blackrock Moderate Prepared is expected to generate 6.09 times more return on investment than Franklin Adjustable. However, Blackrock Moderate is 6.09 times more volatile than Franklin Adjustable Government. It trades about 0.06 of its potential returns per unit of risk. Franklin Adjustable Government is currently generating about 0.14 per unit of risk. If you would invest  1,084  in Blackrock Moderate Prepared on September 23, 2024 and sell it today you would earn a total of  234.00  from holding Blackrock Moderate Prepared or generate 21.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Blackrock Moderate Prepared  vs.  Franklin Adjustable Government

Blackrock Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Franklin Adjustable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Franklin Adjustable Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Franklin Adjustable 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 Moderate and Franklin Adjustable

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

The idea behind Blackrock Moderate Prepared and Franklin Adjustable Government 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.