Correlation Between China Fund and Blackrock Enhanced

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

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

Diversification Opportunities for China Fund and Blackrock Enhanced

-0.19

Correlation Coefficient

China Fund  Blackrock Enhanced

Good diversification

The 3 months correlation between China and Blackrock is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding China Fund and Blackrock Enhanced Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Enhanced and China Fund 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 China Fund are associated (or correlated) with Blackrock Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Enhanced has no effect on the direction of China Fund i.e., China Fund and Blackrock Enhanced go up and down completely randomly.

Pair Corralation between China Fund and Blackrock Enhanced

Considering the 90-day investment horizon China Fund is expected to generate 1.98 times more return on investment than Blackrock Enhanced. However, China Fund is 1.98 times more volatile than Blackrock Enhanced Government. It trades about 0.14 of its potential returns per unit of risk. Blackrock Enhanced Government is currently generating about 0.01 per unit of risk. If you would invest  954.00  in China Fund on September 14, 2024 and sell it today you would earn a total of  272.00  from holding China Fund or generate 28.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

China Fund  vs.  Blackrock Enhanced Government

China Fund

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of very fragile technical indicators, China Fund displayed solid returns over the last few months and may actually be approaching a breakup point.

Blackrock Enhanced

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Enhanced Government are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable technical and fundamental indicators, Blackrock Enhanced is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with China Fund and Blackrock Enhanced

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

The idea behind China Fund and Blackrock Enhanced Government 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.