Correlation Between Blackrock Small and Us Global

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

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

Diversification Opportunities for Blackrock Small and Us Global

0.64

Correlation Coefficient

Blackrock Small  Us Global

Poor diversification

The 3 months correlation between Blackrock and USGLX is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Small Cap and Us Global Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Global Leaders and Blackrock Small 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 Small Cap are associated (or correlated) with Us Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Global Leaders has no effect on the direction of Blackrock Small i.e., Blackrock Small and Us Global go up and down completely randomly.

Pair Corralation between Blackrock Small and Us Global

Assuming the 90 days horizon Blackrock Small Cap is expected to generate 0.67 times more return on investment than Us Global. However, Blackrock Small Cap is 1.49 times less risky than Us Global. It trades about -0.15 of its potential returns per unit of risk. Us Global Leaders is currently generating about -0.14 per unit of risk. If you would invest  1,464  in Blackrock Small Cap on December 1, 2024 and sell it today you would lose (159.00) from holding Blackrock Small Cap or give up 10.86% of portfolio value over 90 days.

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

Blackrock Small Cap  vs.  Us Global Leaders

Blackrock Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Us Global Leaders

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us Global Leaders has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Blackrock Small and Us Global

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

The idea behind Blackrock Small Cap and Us Global Leaders 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.