Correlation Between Blackrock Moderate and College Retirement

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

Diversification Opportunities for Blackrock Moderate and College Retirement

0.77

Correlation Coefficient

Blackrock Moderate  College Retirement

Poor diversification

The 3 months correlation between Blackrock and College is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Moderate Prepared and College Retirement Equities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on College Retirement 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 College Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of College Retirement has no effect on the direction of Blackrock Moderate i.e., Blackrock Moderate and College Retirement go up and down completely randomly.

Pair Corralation between Blackrock Moderate and College Retirement

Assuming the 90 days horizon Blackrock Moderate is expected to generate 3.1 times less return on investment than College Retirement. But when comparing it to its historical volatility, Blackrock Moderate Prepared is 2.07 times less risky than College Retirement. It trades about 0.05 of its potential returns per unit of risk. College Retirement Equities is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  47,433  in College Retirement Equities on October 21, 2024 and sell it today you would earn a total of  4,161  from holding College Retirement Equities or generate 8.77% return on investment over 90 days.

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

Blackrock Moderate Prepared  vs.  College Retirement Equities

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.

College Retirement

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in College Retirement Equities are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, College Retirement 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 College Retirement

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

The idea behind Blackrock Moderate Prepared and College Retirement Equities 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.