Correlation Between Bats Series and Blackrock

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

By analyzing existing cross correlation between Bats Series S and Blackrock Total Bond, you can compare the effects of market volatilities on Bats Series and Blackrock 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. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bats Series and Blackrock.

Diversification Opportunities for Bats Series and Blackrock

0.91

Correlation Coefficient

Bats Series  Blackrock

Almost no diversification

The 3 months correlation between Bats and Blackrock is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bats Series S and Blackrock Total Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Total Bond 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 S are associated (or correlated) with Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Total Bond has no effect on the direction of Bats Series i.e., Bats Series and Blackrock go up and down completely randomly.

Pair Corralation between Bats Series and Blackrock

Assuming the 90 days horizon Bats Series is expected to generate 1.63 times less return on investment than Blackrock. But when comparing it to its historical volatility, Bats Series S is 2.69 times less risky than Blackrock. It trades about 0.22 of its potential returns per unit of risk. Blackrock Total Bond is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  883.00  in Blackrock Total Bond on December 29, 2024 and sell it today you would earn a total of  22.00  from holding Blackrock Total Bond or generate 2.49% return on investment over 90 days.

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

Bats Series S  vs.  Blackrock Total Bond

Bats Series S

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bats Series S are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic 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 Total Bond

Risk-Adjusted Performance

OK

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

Pair Trading with Bats Series and Blackrock

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

The idea behind Bats Series S and Blackrock Total Bond 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.