Correlation Between Bats Series and Blackrock Mid

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

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

Diversification Opportunities for Bats Series and Blackrock Mid

-0.75

Correlation Coefficient

Bats Series  Blackrock Mid

Pay attention - limited upside

The 3 months correlation between Bats and Blackrock is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bats Series M and Blackrock Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Mid Cap and Bats Series 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 Bats Series M are associated (or correlated) with Blackrock Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Mid Cap has no effect on the direction of Bats Series i.e., Bats Series and Blackrock Mid go up and down completely randomly.

Pair Corralation between Bats Series and Blackrock Mid

Assuming the 90 days horizon Bats Series M is expected to generate 0.17 times more return on investment than Blackrock Mid. However, Bats Series M is 5.91 times less risky than Blackrock Mid. It trades about 0.14 of its potential returns per unit of risk. Blackrock Mid Cap is currently generating about -0.11 per unit of risk. If you would invest  815.00  in Bats Series M on December 29, 2024 and sell it today you would earn a total of  23.00  from holding Bats Series M or generate 2.82% return on investment over 90 days.

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

Bats Series M  vs.  Blackrock Mid Cap

Bats Series M

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bats Series M are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Bats Series is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Bats Series and Blackrock Mid

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

The idea behind Bats Series M and Blackrock Mid 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.