Correlation Between Mai Managed and Blackrock Large

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

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

Diversification Opportunities for Mai Managed and Blackrock Large

0.86

Correlation Coefficient

Mai Managed  Blackrock Large

Very poor diversification

The 3 months correlation between Mai and Blackrock is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Mai Managed Volatility and Blackrock Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Large Cap and Mai Managed 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 Mai Managed Volatility are associated (or correlated) with Blackrock Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Large Cap has no effect on the direction of Mai Managed i.e., Mai Managed and Blackrock Large go up and down completely randomly.

Pair Corralation between Mai Managed and Blackrock Large

Assuming the 90 days horizon Mai Managed Volatility is expected to under-perform the Blackrock Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Mai Managed Volatility is 1.68 times less risky than Blackrock Large. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Blackrock Large Cap is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,033  in Blackrock Large Cap on December 20, 2024 and sell it today you would earn a total of  31.00  from holding Blackrock Large Cap or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Mai Managed Volatility  vs.  Blackrock Large Cap

Mai Managed Volatility

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mai Managed Volatility has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Mai Managed is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Large Cap

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Large Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mai Managed and Blackrock Large

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

The idea behind Mai Managed Volatility and Blackrock Large Cap 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.