Correlation Between Empiric 2500 and Blackrock Mid

Can any of the company-specific risk be diversified away by investing in both Empiric 2500 and Blackrock Mid 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 Empiric 2500 and Blackrock Mid into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Empiric 2500 Fund and Blackrock Mid Cap, you can compare the effects of market volatilities on Empiric 2500 and Blackrock Mid 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 Empiric 2500 with a short position of Blackrock Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empiric 2500 and Blackrock Mid.

Diversification Opportunities for Empiric 2500 and Blackrock Mid

0.93

Correlation Coefficient

Empiric 2500  Blackrock Mid

Almost no diversification

The 3 months correlation between Empiric and Blackrock is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Empiric 2500 Fund and Blackrock Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Mid Cap and Empiric 2500 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 Empiric 2500 Fund are associated (or correlated) with Blackrock Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Mid Cap has no effect on the direction of Empiric 2500 i.e., Empiric 2500 and Blackrock Mid go up and down completely randomly.

Pair Corralation between Empiric 2500 and Blackrock Mid

Assuming the 90 days horizon Empiric 2500 is expected to generate 1.53 times less return on investment than Blackrock Mid. But when comparing it to its historical volatility, Empiric 2500 Fund is 1.29 times less risky than Blackrock Mid. It trades about 0.07 of its potential returns per unit of risk. Blackrock Mid Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,978  in Blackrock Mid Cap on September 26, 2024 and sell it today you would earn a total of  1,505  from holding Blackrock Mid Cap or generate 50.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Empiric 2500 Fund  vs.  Blackrock Mid Cap

Empiric 2500

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Empiric 2500 Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Empiric 2500 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Mid Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Mid Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Blackrock Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Empiric 2500 and Blackrock Mid

The main advantage of trading using opposite Empiric 2500 and Blackrock Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empiric 2500 position performs unexpectedly, Blackrock Mid 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 Mid will offset losses from the drop in Blackrock Mid's long position.

The idea behind Empiric 2500 Fund and Blackrock Mid 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 CEOs Directory module to screen CEOs from public companies around the world.