Correlation Between Blackrock International and Plumb Equity

Can any of the company-specific risk be diversified away by investing in both Blackrock International and Plumb Equity 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 Plumb Equity 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 Plumb Equity Fund, you can compare the effects of market volatilities on Blackrock International and Plumb Equity 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 Plumb Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock International and Plumb Equity.

Diversification Opportunities for Blackrock International and Plumb Equity

-0.72

Correlation Coefficient

Blackrock International  Plumb Equity

Pay attention - limited upside

The 3 months correlation between Blackrock and Plumb is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock International Index and Plumb Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plumb Equity 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 Plumb Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plumb Equity has no effect on the direction of Blackrock International i.e., Blackrock International and Plumb Equity go up and down completely randomly.

Pair Corralation between Blackrock International and Plumb Equity

Assuming the 90 days horizon Blackrock International Index is expected to under-perform the Plumb Equity. In addition to that, Blackrock International is 1.04 times more volatile than Plumb Equity Fund. It trades about -0.11 of its total potential returns per unit of risk. Plumb Equity Fund is currently generating about 0.09 per unit of volatility. If you would invest  2,973  in Plumb Equity Fund on September 15, 2024 and sell it today you would earn a total of  154.00  from holding Plumb Equity Fund or generate 5.18% return on investment over 90 days.

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

Blackrock International Index  vs.  Plumb Equity Fund

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 latest weak performance, the Fund's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Plumb Equity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Plumb Equity Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Plumb Equity 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 Plumb Equity

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

The idea behind Blackrock International Index and Plumb Equity Fund 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.