Correlation Between Blackrock Lifepath and Blackrock Advantage

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

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

Diversification Opportunities for Blackrock Lifepath and Blackrock Advantage

0.3

Correlation Coefficient

Blackrock Lifepath  Blackrock Advantage

Weak diversification

The 3 months correlation between Blackrock and Blackrock is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Lifepath Dynamic and Blackrock Advantage Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Advantage and Blackrock Lifepath 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 Lifepath Dynamic 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 Blackrock Lifepath i.e., Blackrock Lifepath and Blackrock Advantage go up and down completely randomly.

Pair Corralation between Blackrock Lifepath and Blackrock Advantage

Assuming the 90 days horizon Blackrock Lifepath Dynamic is expected to generate 0.53 times more return on investment than Blackrock Advantage. However, Blackrock Lifepath Dynamic is 1.87 times less risky than Blackrock Advantage. It trades about 0.1 of its potential returns per unit of risk. Blackrock Advantage Global is currently generating about 0.05 per unit of risk. If you would invest  1,151  in Blackrock Lifepath Dynamic on September 23, 2024 and sell it today you would earn a total of  176.00  from holding Blackrock Lifepath Dynamic or generate 15.29% return on investment over 90 days.

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

Blackrock Lifepath Dynamic  vs.  Blackrock Advantage Global

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 fundamental indicators, Blackrock Lifepath 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

0 of 100

Very Weak

Over the last 90 days Blackrock Advantage Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental 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 Blackrock Lifepath and Blackrock Advantage

The main advantage of trading using opposite Blackrock Lifepath and Blackrock Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Lifepath 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 Blackrock Lifepath Dynamic and Blackrock Advantage Global 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.