Correlation Between Blackrock International and Causeway International

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

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

Diversification Opportunities for Blackrock International and Causeway International

0.94

Correlation Coefficient

Blackrock International  Causeway International

Almost no diversification

The 3 months correlation between Blackrock and Causeway is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock International Index and Causeway International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Causeway International and Blackrock International 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 International Index are associated (or correlated) with Causeway International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Causeway International has no effect on the direction of Blackrock International i.e., Blackrock International and Causeway International go up and down completely randomly.

Pair Corralation between Blackrock International and Causeway International

Assuming the 90 days horizon Blackrock International Index is expected to under-perform the Causeway International. In addition to that, Blackrock International is 2.05 times more volatile than Causeway International Value. It trades about -0.06 of its total potential returns per unit of risk. Causeway International Value is currently generating about 0.14 per unit of volatility. If you would invest  2,036  in Causeway International Value on September 17, 2024 and sell it today you would earn a total of  28.00  from holding Causeway International Value or generate 1.38% return on investment over 90 days.

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

Blackrock International Index  vs.  Causeway International Value

Blackrock International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock International Index has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward-looking signals, Blackrock International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Causeway International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Causeway International Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Causeway International 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 International and Causeway International

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

The idea behind Blackrock International Index and Causeway International Value 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.