Correlation Between Blackrock Science and Mid Cap

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

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

Diversification Opportunities for Blackrock Science and Mid Cap

0.66

Correlation Coefficient

Blackrock Science  Mid Cap

Poor diversification

The 3 months correlation between Blackrock and Mid is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Science Technology and Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Index and Blackrock Science 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 Science Technology are associated (or correlated) with Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Index has no effect on the direction of Blackrock Science i.e., Blackrock Science and Mid Cap go up and down completely randomly.

Pair Corralation between Blackrock Science and Mid Cap

Assuming the 90 days horizon Blackrock Science Technology is expected to generate 1.38 times more return on investment than Mid Cap. However, Blackrock Science is 1.38 times more volatile than Mid Cap Index. It trades about 0.08 of its potential returns per unit of risk. Mid Cap Index is currently generating about 0.05 per unit of risk. If you would invest  3,830  in Blackrock Science Technology on December 1, 2024 and sell it today you would earn a total of  2,780  from holding Blackrock Science Technology or generate 72.58% return on investment over 90 days.

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

Blackrock Science Technology  vs.  Mid Cap Index

Blackrock Science

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Science Technology has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Mid Cap Index

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid Cap Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Blackrock Science and Mid Cap

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

The idea behind Blackrock Science Technology and Mid Cap Index 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .