Correlation Between Blackrock Multi-asset and Wealthbuilder Moderate

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

By analyzing existing cross correlation between Blackrock Multi Asset Income and Wealthbuilder Moderate Balanced, you can compare the effects of market volatilities on Blackrock Multi-asset and Wealthbuilder Moderate 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 Multi-asset with a short position of Wealthbuilder Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Multi-asset and Wealthbuilder Moderate.

Diversification Opportunities for Blackrock Multi-asset and Wealthbuilder Moderate

0.85

Correlation Coefficient

Blackrock Multi-asset  Wealthbuilder Moderate

Very poor diversification

The 3 months correlation between Blackrock and Wealthbuilder is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Multi Asset Income and Wealthbuilder Moderate Balance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wealthbuilder Moderate and Blackrock Multi-asset 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 Multi Asset Income are associated (or correlated) with Wealthbuilder Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wealthbuilder Moderate has no effect on the direction of Blackrock Multi-asset i.e., Blackrock Multi-asset and Wealthbuilder Moderate go up and down completely randomly.

Pair Corralation between Blackrock Multi-asset and Wealthbuilder Moderate

Assuming the 90 days horizon Blackrock Multi Asset Income is expected to generate 0.64 times more return on investment than Wealthbuilder Moderate. However, Blackrock Multi Asset Income is 1.55 times less risky than Wealthbuilder Moderate. It trades about -0.05 of its potential returns per unit of risk. Wealthbuilder Moderate Balanced is currently generating about -0.06 per unit of risk. If you would invest  1,018  in Blackrock Multi Asset Income on October 10, 2024 and sell it today you would lose (9.00) from holding Blackrock Multi Asset Income or give up 0.88% of portfolio value over 90 days.

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

Blackrock Multi Asset Income  vs.  Wealthbuilder Moderate Balance

Blackrock Multi Asset

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wealthbuilder Moderate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wealthbuilder Moderate Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Wealthbuilder Moderate 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 Multi-asset and Wealthbuilder Moderate

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

The idea behind Blackrock Multi Asset Income and Wealthbuilder Moderate Balanced 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.