Correlation Between Alphacentric Hedged and Blackrock Equity

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

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

Diversification Opportunities for Alphacentric Hedged and Blackrock Equity

0.52

Correlation Coefficient

Alphacentric Hedged  Blackrock Equity

Very weak diversification

The 3 months correlation between Alphacentric and Blackrock is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Hedged Market and Blackrock Equity Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Equity Dividend and Alphacentric Hedged 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 Alphacentric Hedged Market are associated (or correlated) with Blackrock Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Equity Dividend has no effect on the direction of Alphacentric Hedged i.e., Alphacentric Hedged and Blackrock Equity go up and down completely randomly.

Pair Corralation between Alphacentric Hedged and Blackrock Equity

Assuming the 90 days horizon Alphacentric Hedged Market is expected to generate 0.61 times more return on investment than Blackrock Equity. However, Alphacentric Hedged Market is 1.64 times less risky than Blackrock Equity. It trades about -0.07 of its potential returns per unit of risk. Blackrock Equity Dividend is currently generating about -0.23 per unit of risk. If you would invest  2,884  in Alphacentric Hedged Market on October 9, 2024 and sell it today you would lose (58.00) from holding Alphacentric Hedged Market or give up 2.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

Alphacentric Hedged Market  vs.  Blackrock Equity Dividend

Alphacentric Hedged

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alphacentric Hedged Market are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Alphacentric Hedged is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Equity Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Equity Dividend has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators 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 Alphacentric Hedged and Blackrock Equity

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

The idea behind Alphacentric Hedged Market and Blackrock Equity Dividend 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.