Correlation Between Fixed Income and Blackrock Advantage

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

By analyzing existing cross correlation between The Fixed Income and Blackrock Advantage International, you can compare the effects of market volatilities on Fixed Income and Blackrock Advantage 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 Fixed Income with a short position of Blackrock Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fixed Income and Blackrock Advantage.

Diversification Opportunities for Fixed Income and Blackrock Advantage

0.38

Correlation Coefficient

Fixed Income  Blackrock Advantage

Weak diversification

The 3 months correlation between Fixed and Blackrock is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding The Fixed Income and Blackrock Advantage Internatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Advantage and Fixed Income 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 The Fixed Income are associated (or correlated) with Blackrock Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Advantage has no effect on the direction of Fixed Income i.e., Fixed Income and Blackrock Advantage go up and down completely randomly.

Pair Corralation between Fixed Income and Blackrock Advantage

Assuming the 90 days horizon The Fixed Income is expected to under-perform the Blackrock Advantage. But the mutual fund apears to be less risky and, when comparing its historical volatility, The Fixed Income is 2.79 times less risky than Blackrock Advantage. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Blackrock Advantage International is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,864  in Blackrock Advantage International on December 29, 2024 and sell it today you would earn a total of  212.00  from holding Blackrock Advantage International or generate 11.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

The Fixed Income  vs.  Blackrock Advantage Internatio

Fixed Income

Risk-Adjusted Performance

Very Weak

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

Blackrock Advantage

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Advantage International are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock Advantage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Fixed Income and Blackrock Advantage

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

The idea behind The Fixed Income and Blackrock Advantage International 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.