Correlation Between Blackrock Inflation and Nuveen Small

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

By analyzing existing cross correlation between Blackrock Inflation Protected and Nuveen Small Cap, you can compare the effects of market volatilities on Blackrock Inflation and Nuveen Small 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 Inflation with a short position of Nuveen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Inflation and Nuveen Small.

Diversification Opportunities for Blackrock Inflation and Nuveen Small

-0.64

Correlation Coefficient

Blackrock Inflation  Nuveen Small

Excellent diversification

The 3 months correlation between Blackrock and Nuveen is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Inflation Protected and Nuveen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Small Cap and Blackrock Inflation 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 Inflation Protected are associated (or correlated) with Nuveen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Small Cap has no effect on the direction of Blackrock Inflation i.e., Blackrock Inflation and Nuveen Small go up and down completely randomly.

Pair Corralation between Blackrock Inflation and Nuveen Small

Assuming the 90 days horizon Blackrock Inflation Protected is expected to under-perform the Nuveen Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock Inflation Protected is 4.64 times less risky than Nuveen Small. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Nuveen Small Cap is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,469  in Nuveen Small Cap on September 5, 2024 and sell it today you would earn a total of  392.00  from holding Nuveen Small Cap or generate 15.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Blackrock Inflation Protected  vs.  Nuveen Small Cap

Blackrock Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nuveen Small Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Small Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Nuveen Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock Inflation and Nuveen Small

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

The idea behind Blackrock Inflation Protected and Nuveen Small Cap 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.