Correlation Between Blackrock Moderate and Amer Beacon

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

Diversification Opportunities for Blackrock Moderate and Amer Beacon

0.63

Correlation Coefficient

Blackrock Moderate  Amer Beacon

Poor diversification

The 3 months correlation between Blackrock and Amer is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Moderate Prepared and Amer Beacon Garcia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amer Beacon Garcia 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 Amer Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amer Beacon Garcia has no effect on the direction of Blackrock Moderate i.e., Blackrock Moderate and Amer Beacon go up and down completely randomly.

Pair Corralation between Blackrock Moderate and Amer Beacon

Assuming the 90 days horizon Blackrock Moderate Prepared is expected to under-perform the Amer Beacon. In addition to that, Blackrock Moderate is 2.37 times more volatile than Amer Beacon Garcia. It trades about -0.39 of its total potential returns per unit of risk. Amer Beacon Garcia is currently generating about -0.54 per unit of volatility. If you would invest  866.00  in Amer Beacon Garcia on October 8, 2024 and sell it today you would lose (29.00) from holding Amer Beacon Garcia or give up 3.35% of portfolio value over 90 days.

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

Blackrock Moderate Prepared  vs.  Amer Beacon Garcia

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.

Amer Beacon Garcia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amer Beacon Garcia has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Amer Beacon 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 Amer Beacon

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

The idea behind Blackrock Moderate Prepared and Amer Beacon Garcia 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.