Correlation Between SPACE and Blackrock Lifepath

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

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

Diversification Opportunities for SPACE and Blackrock Lifepath

0.28

Correlation Coefficient

SPACE  Blackrock Lifepath

Modest diversification

The 3 months correlation between SPACE and Blackrock is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Blackrock Lifepath Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Lifepath and SPACE 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 SPACE 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 SPACE i.e., SPACE and Blackrock Lifepath go up and down completely randomly.

Pair Corralation between SPACE and Blackrock Lifepath

Assuming the 90 days horizon SPACE is expected to generate 7.14 times more return on investment than Blackrock Lifepath. However, SPACE is 7.14 times more volatile than Blackrock Lifepath Dynamic. It trades about 0.04 of its potential returns per unit of risk. Blackrock Lifepath Dynamic is currently generating about -0.08 per unit of risk. If you would invest  38.00  in SPACE on October 24, 2024 and sell it today you would earn a total of  2.00  from holding SPACE or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

SPACE  vs.  Blackrock Lifepath Dynamic

SPACE

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SPACE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, SPACE exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 fairly strong forward-looking signals, Blackrock Lifepath is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SPACE and Blackrock Lifepath

The main advantage of trading using opposite SPACE and Blackrock Lifepath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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 SPACE 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.