Correlation Between Stone Harbor and Blackrock Debt

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

By analyzing existing cross correlation between Stone Harbor Emerging and Blackrock Debt Strategies, you can compare the effects of market volatilities on Stone Harbor and Blackrock Debt 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 Stone Harbor with a short position of Blackrock Debt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Harbor and Blackrock Debt.

Diversification Opportunities for Stone Harbor and Blackrock Debt

0.35

Correlation Coefficient

Stone Harbor  Blackrock Debt

Weak diversification

The 3 months correlation between Stone and Blackrock is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Stone Harbor Emerging and Blackrock Debt Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Debt Strategies and Stone Harbor 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 Stone Harbor Emerging are associated (or correlated) with Blackrock Debt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Debt Strategies has no effect on the direction of Stone Harbor i.e., Stone Harbor and Blackrock Debt go up and down completely randomly.

Pair Corralation between Stone Harbor and Blackrock Debt

Considering the 90-day investment horizon Stone Harbor Emerging is expected to under-perform the Blackrock Debt. In addition to that, Stone Harbor is 2.26 times more volatile than Blackrock Debt Strategies. It trades about -0.01 of its total potential returns per unit of risk. Blackrock Debt Strategies is currently generating about 0.03 per unit of volatility. If you would invest  1,075  in Blackrock Debt Strategies on September 12, 2024 and sell it today you would earn a total of  8.00  from holding Blackrock Debt Strategies or generate 0.74% return on investment over 90 days.

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

Stone Harbor Emerging  vs.  Blackrock Debt Strategies

Stone Harbor Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stone Harbor Emerging has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable fundamental indicators, Stone Harbor is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Blackrock Debt Strategies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Debt Strategies are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Blackrock Debt is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Stone Harbor and Blackrock Debt

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

The idea behind Stone Harbor Emerging and Blackrock Debt Strategies 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.