Correlation Between Blackrock Fundamental and International Equity

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

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

Diversification Opportunities for Blackrock Fundamental and International Equity

-0.35

Correlation Coefficient

Blackrock Fundamental  International Equity

Very good diversification

The 3 months correlation between Blackrock and International is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Fundamental Growth and International Equity Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Equity and Blackrock Fundamental 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 Fundamental Growth are associated (or correlated) with International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Blackrock Fundamental i.e., Blackrock Fundamental and International Equity go up and down completely randomly.

Pair Corralation between Blackrock Fundamental and International Equity

Assuming the 90 days horizon Blackrock Fundamental Growth is expected to generate 0.65 times more return on investment than International Equity. However, Blackrock Fundamental Growth is 1.55 times less risky than International Equity. It trades about 0.08 of its potential returns per unit of risk. International Equity Series is currently generating about -0.19 per unit of risk. If you would invest  4,259  in Blackrock Fundamental Growth on September 26, 2024 and sell it today you would earn a total of  227.00  from holding Blackrock Fundamental Growth or generate 5.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Blackrock Fundamental Growth  vs.  International Equity Series

Blackrock Fundamental

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Fundamental Growth are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Blackrock Fundamental is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Equity Series has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Blackrock Fundamental and International Equity

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

The idea behind Blackrock Fundamental Growth and International Equity Series 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.