Correlation Between Barings Us and Blackrock Fundamental

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

By analyzing existing cross correlation between Barings High Yield and Blackrock Fundamental Growth, you can compare the effects of market volatilities on Barings Us and Blackrock Fundamental 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 Barings Us with a short position of Blackrock Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Blackrock Fundamental.

Diversification Opportunities for Barings Us and Blackrock Fundamental

0.73

Correlation Coefficient

Barings Us  Blackrock Fundamental

Poor diversification

The 3 months correlation between Barings and Blackrock is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Blackrock Fundamental Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Fundamental and Barings Us 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 Barings High Yield are associated (or correlated) with Blackrock Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Fundamental has no effect on the direction of Barings Us i.e., Barings Us and Blackrock Fundamental go up and down completely randomly.

Pair Corralation between Barings Us and Blackrock Fundamental

Assuming the 90 days horizon Barings Us is expected to generate 3.07 times less return on investment than Blackrock Fundamental. But when comparing it to its historical volatility, Barings High Yield is 4.47 times less risky than Blackrock Fundamental. It trades about 0.12 of its potential returns per unit of risk. Blackrock Fundamental Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,858  in Blackrock Fundamental Growth on October 26, 2024 and sell it today you would earn a total of  1,663  from holding Blackrock Fundamental Growth or generate 58.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Barings High Yield  vs.  Blackrock Fundamental Growth

Barings High Yield

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barings High Yield are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Fundamental

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Fundamental Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Blackrock Fundamental may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Barings Us and Blackrock Fundamental

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

The idea behind Barings High Yield and Blackrock Fundamental Growth 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.