Correlation Between Blackrock Enhanced and Growth Fund

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

Diversification Opportunities for Blackrock Enhanced and Growth Fund

0.85

Correlation Coefficient

Blackrock Enhanced  Growth Fund

Very poor diversification

The 3 months correlation between Blackrock and Growth is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Capital and Growth Fund I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Fund I 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 Growth Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Fund I has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Growth Fund go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Growth Fund

Considering the 90-day investment horizon Blackrock Enhanced Capital is expected to generate 0.63 times more return on investment than Growth Fund. However, Blackrock Enhanced Capital is 1.58 times less risky than Growth Fund. It trades about -0.11 of its potential returns per unit of risk. Growth Fund I is currently generating about -0.13 per unit of risk. If you would invest  1,971  in Blackrock Enhanced Capital on December 30, 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	Strong
Accuracy	100.0%
Values	Daily Returns

Blackrock Enhanced Capital  vs.  Growth Fund I

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 fairly strong forward indicators, Blackrock Enhanced is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Growth Fund I

Risk-Adjusted Performance

Very Weak

Over the last 90 days Growth Fund I 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 Growth Fund

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

The idea behind Blackrock Enhanced Capital and Growth Fund I 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.