Correlation Between Materials Portfolio and Blackrock Lifepath

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

By analyzing existing cross correlation between Materials Portfolio Fidelity and Blackrock Lifepath Dynamic, you can compare the effects of market volatilities on Materials Portfolio and Blackrock Lifepath 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 Materials Portfolio with a short position of Blackrock Lifepath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Portfolio and Blackrock Lifepath.

Diversification Opportunities for Materials Portfolio and Blackrock Lifepath

0.83

Correlation Coefficient

Materials Portfolio  Blackrock Lifepath

Very poor diversification

The 3 months correlation between Materials and Blackrock is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Materials Portfolio Fidelity and Blackrock Lifepath Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Lifepath and Materials Portfolio 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 Materials Portfolio Fidelity are associated (or correlated) with Blackrock Lifepath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Lifepath has no effect on the direction of Materials Portfolio i.e., Materials Portfolio and Blackrock Lifepath go up and down completely randomly.

Pair Corralation between Materials Portfolio and Blackrock Lifepath

Assuming the 90 days horizon Materials Portfolio Fidelity is expected to under-perform the Blackrock Lifepath. In addition to that, Materials Portfolio is 1.44 times more volatile than Blackrock Lifepath Dynamic. It trades about -0.22 of its total potential returns per unit of risk. Blackrock Lifepath Dynamic is currently generating about -0.13 per unit of volatility. If you would invest  1,716  in Blackrock Lifepath Dynamic on October 5, 2024 and sell it today you would lose (129.00) from holding Blackrock Lifepath Dynamic or give up 7.52% of portfolio value over 90 days.

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

Materials Portfolio Fidelity  vs.  Blackrock Lifepath Dynamic

Materials Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Materials Portfolio Fidelity 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Blackrock Lifepath

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Materials Portfolio and Blackrock Lifepath

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

The idea behind Materials Portfolio Fidelity and Blackrock Lifepath Dynamic 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.