Correlation Between BlackRock MIT and Invesco High

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

By analyzing existing cross correlation between BlackRock MIT II and Invesco High Income, you can compare the effects of market volatilities on BlackRock MIT and Invesco High 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 MIT with a short position of Invesco High. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock MIT and Invesco High.

Diversification Opportunities for BlackRock MIT and Invesco High

-0.51

Correlation Coefficient

BlackRock MIT  Invesco High

Excellent diversification

The 3 months correlation between BlackRock and Invesco is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock MIT II and Invesco High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High Income and BlackRock MIT 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 MIT II are associated (or correlated) with Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Income has no effect on the direction of BlackRock MIT i.e., BlackRock MIT and Invesco High go up and down completely randomly.

Pair Corralation between BlackRock MIT and Invesco High

Considering the 90-day investment horizon BlackRock MIT II is expected to under-perform the Invesco High. In addition to that, BlackRock MIT is 1.79 times more volatile than Invesco High Income. It trades about -0.19 of its total potential returns per unit of risk. Invesco High Income is currently generating about 0.1 per unit of volatility. If you would invest  743.00  in Invesco High Income on October 1, 2024 and sell it today you would earn a total of  11.00  from holding Invesco High Income or generate 1.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	69.84%
Values	Daily Returns

BlackRock MIT II  vs.  Invesco High Income

BlackRock MIT II

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock MIT II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Invesco High Income

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Invesco High Income has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Invesco High 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 MIT and Invesco High

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

The idea behind BlackRock MIT II and Invesco High Income 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.