Correlation Between Blackrock Enhanced and Select Fund

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

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

Diversification Opportunities for Blackrock Enhanced and Select Fund

0.9

Correlation Coefficient

Blackrock Enhanced  Select Fund

Almost no diversification

The 3 months correlation between Blackrock and Select is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Capital and Select Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Select Fund Investor and Blackrock Enhanced 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 Enhanced Capital are associated (or correlated) with Select Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Select Fund Investor has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Select Fund go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Select Fund

Considering the 90-day investment horizon Blackrock Enhanced Capital is expected to generate 0.66 times more return on investment than Select Fund. However, Blackrock Enhanced Capital is 1.51 times less risky than Select Fund. It trades about -0.11 of its potential returns per unit of risk. Select Fund Investor is currently generating about -0.13 per unit of risk. If you would invest  1,971  in Blackrock Enhanced Capital on December 29, 2024 and sell it today you would lose (122.00) from holding Blackrock Enhanced Capital or give up 6.19% of portfolio value over 90 days.

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

Blackrock Enhanced Capital  vs.  Select Fund Investor

Blackrock Enhanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Enhanced Capital has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the fund traders.

Select Fund Investor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Select Fund Investor has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Enhanced and Select Fund

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

The idea behind Blackrock Enhanced Capital and Select Fund Investor 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.