Correlation Between BlackRock World and BlackRock Future

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

By analyzing existing cross correlation between BlackRock World ex and BlackRock Future Health, you can compare the effects of market volatilities on BlackRock World and BlackRock Future 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 BlackRock World with a short position of BlackRock Future. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock World and BlackRock Future.

Diversification Opportunities for BlackRock World and BlackRock Future

0.69

Correlation Coefficient

BlackRock World  BlackRock Future

Poor diversification

The 3 months correlation between BlackRock and BlackRock is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock World ex and BlackRock Future Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Future Health and BlackRock World 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 BlackRock World ex are associated (or correlated) with BlackRock Future. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Future Health has no effect on the direction of BlackRock World i.e., BlackRock World and BlackRock Future go up and down completely randomly.

Pair Corralation between BlackRock World and BlackRock Future

Given the investment horizon of 90 days BlackRock World ex is expected to generate 0.93 times more return on investment than BlackRock Future. However, BlackRock World ex is 1.08 times less risky than BlackRock Future. It trades about 0.04 of its potential returns per unit of risk. BlackRock Future Health is currently generating about 0.03 per unit of risk. If you would invest  3,875  in BlackRock World ex on October 27, 2024 and sell it today you would earn a total of  682.00  from holding BlackRock World ex or generate 17.6% return on investment over 90 days.

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

BlackRock World ex  vs.  BlackRock Future Health

BlackRock World ex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock World ex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BlackRock World is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

BlackRock Future Health

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Future Health are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, BlackRock Future is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BlackRock World and BlackRock Future

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

The idea behind BlackRock World ex and BlackRock Future Health 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.