Correlation Between European Equity and Blackrock Enhanced

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

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

Diversification Opportunities for European Equity and Blackrock Enhanced

-0.59

Correlation Coefficient

European Equity  Blackrock Enhanced

Excellent diversification

The 3 months correlation between European and Blackrock is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding European Equity Closed and Blackrock Enhanced Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Enhanced and European Equity 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 European Equity Closed are associated (or correlated) with Blackrock Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Enhanced has no effect on the direction of European Equity i.e., European Equity and Blackrock Enhanced go up and down completely randomly.

Pair Corralation between European Equity and Blackrock Enhanced

Considering the 90-day investment horizon European Equity is expected to generate 7.24 times less return on investment than Blackrock Enhanced. In addition to that, European Equity is 1.06 times more volatile than Blackrock Enhanced Capital. It trades about 0.01 of its total potential returns per unit of risk. Blackrock Enhanced Capital is currently generating about 0.06 per unit of volatility. If you would invest  1,595  in Blackrock Enhanced Capital on October 13, 2024 and sell it today you would earn a total of  420.00  from holding Blackrock Enhanced Capital or generate 26.33% return on investment over 90 days.

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

European Equity Closed  vs.  Blackrock Enhanced Capital

European Equity Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days European Equity Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite 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.

Blackrock Enhanced

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Enhanced Capital are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with European Equity and Blackrock Enhanced

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

The idea behind European Equity Closed and Blackrock Enhanced Capital 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.