Correlation Between Blackrock Inflation and Rational Strategic

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

Diversification Opportunities for Blackrock Inflation and Rational Strategic

0.35

Correlation Coefficient

Blackrock Inflation  Rational Strategic

Weak diversification

The 3 months correlation between Blackrock and Rational is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Inflation Protected and Rational Strategic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Strategic 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 Rational Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Strategic has no effect on the direction of Blackrock Inflation i.e., Blackrock Inflation and Rational Strategic go up and down completely randomly.

Pair Corralation between Blackrock Inflation and Rational Strategic

Assuming the 90 days horizon Blackrock Inflation is expected to generate 8.52 times less return on investment than Rational Strategic. But when comparing it to its historical volatility, Blackrock Inflation Protected is 3.55 times less risky than Rational Strategic. It trades about 0.02 of its potential returns per unit of risk. Rational Strategic Allocation is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  659.00  in Rational Strategic Allocation on October 11, 2024 and sell it today you would earn a total of  201.00  from holding Rational Strategic Allocation or generate 30.5% return on investment over 90 days.

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

Blackrock Inflation Protected  vs.  Rational Strategic Allocation

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.

Rational Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rational Strategic Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Rational Strategic 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 Inflation and Rational Strategic

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

The idea behind Blackrock Inflation Protected and Rational Strategic Allocation 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.