Correlation Between Vy(r) Baron and Blackrock Natural

Can any of the company-specific risk be diversified away by investing in both Vy(r) Baron and Blackrock Natural 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 Vy(r) Baron and Blackrock Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vy Baron Growth and Blackrock Natural Resources, you can compare the effects of market volatilities on Vy(r) Baron and Blackrock Natural 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 Vy(r) Baron with a short position of Blackrock Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vy(r) Baron and Blackrock Natural.

Diversification Opportunities for Vy(r) Baron and Blackrock Natural

-0.2

Correlation Coefficient

Vy(r) Baron  Blackrock Natural

Good diversification

The 3 months correlation between Vy(r) and Blackrock is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Vy Baron Growth and Blackrock Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Natural and Vy(r) Baron 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 Vy Baron Growth are associated (or correlated) with Blackrock Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Natural has no effect on the direction of Vy(r) Baron i.e., Vy(r) Baron and Blackrock Natural go up and down completely randomly.

Pair Corralation between Vy(r) Baron and Blackrock Natural

Assuming the 90 days horizon Vy Baron Growth is expected to under-perform the Blackrock Natural. In addition to that, Vy(r) Baron is 1.02 times more volatile than Blackrock Natural Resources. It trades about -0.09 of its total potential returns per unit of risk. Blackrock Natural Resources is currently generating about 0.16 per unit of volatility. If you would invest  2,638  in Blackrock Natural Resources on December 29, 2024 and sell it today you would earn a total of  247.00  from holding Blackrock Natural Resources or generate 9.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Vy Baron Growth  vs.  Blackrock Natural Resources

Vy Baron Growth

Risk-Adjusted Performance

Very Weak

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

Blackrock Natural

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Natural Resources are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Blackrock Natural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vy(r) Baron and Blackrock Natural

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

The idea behind Vy Baron Growth and Blackrock Natural Resources 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.