Correlation Between Blackrock Advantage and Transamerica Emerging

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

By analyzing existing cross correlation between Blackrock Advantage International and Transamerica Emerging Markets, you can compare the effects of market volatilities on Blackrock Advantage and Transamerica Emerging 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 Advantage with a short position of Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Advantage and Transamerica Emerging.

Diversification Opportunities for Blackrock Advantage and Transamerica Emerging

0.79

Correlation Coefficient

Blackrock Advantage  Transamerica Emerging

Poor diversification

The 3 months correlation between Blackrock and Transamerica is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Advantage Internatio and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging and Blackrock Advantage 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 Advantage International are associated (or correlated) with Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Blackrock Advantage i.e., Blackrock Advantage and Transamerica Emerging go up and down completely randomly.

Pair Corralation between Blackrock Advantage and Transamerica Emerging

Assuming the 90 days horizon Blackrock Advantage International is expected to generate 0.85 times more return on investment than Transamerica Emerging. However, Blackrock Advantage International is 1.18 times less risky than Transamerica Emerging. It trades about 0.19 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about 0.13 per unit of risk. If you would invest  1,874  in Blackrock Advantage International on December 27, 2024 and sell it today you would earn a total of  196.00  from holding Blackrock Advantage International or generate 10.46% return on investment over 90 days.

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

Blackrock Advantage Internatio  vs.  Transamerica Emerging Markets

Blackrock Advantage

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Advantage International are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock Advantage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Transamerica Emerging

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Emerging Markets are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, Transamerica Emerging may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Blackrock Advantage and Transamerica Emerging

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

The idea behind Blackrock Advantage International and Transamerica Emerging Markets 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.