Correlation Between Litman Gregory and Blackrock All-cap

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

By analyzing existing cross correlation between Litman Gregory Masters and Blackrock All Cap Energy, you can compare the effects of market volatilities on Litman Gregory and Blackrock All-cap 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 Litman Gregory with a short position of Blackrock All-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litman Gregory and Blackrock All-cap.

Diversification Opportunities for Litman Gregory and Blackrock All-cap

0.24

Correlation Coefficient

Litman Gregory  Blackrock All-cap

Modest diversification

The 3 months correlation between Litman and BLACKROCK is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Litman Gregory Masters and Blackrock All Cap Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock All Cap and Litman Gregory 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 Litman Gregory Masters are associated (or correlated) with Blackrock All-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock All Cap has no effect on the direction of Litman Gregory i.e., Litman Gregory and Blackrock All-cap go up and down completely randomly.

Pair Corralation between Litman Gregory and Blackrock All-cap

Assuming the 90 days horizon Litman Gregory Masters is expected to under-perform the Blackrock All-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Litman Gregory Masters is 6.75 times less risky than Blackrock All-cap. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Blackrock All Cap Energy is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,372  in Blackrock All Cap Energy on October 11, 2024 and sell it today you would earn a total of  1.00  from holding Blackrock All Cap Energy or generate 0.07% return on investment over 90 days.

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

Litman Gregory Masters  vs.  Blackrock All Cap Energy

Litman Gregory Masters

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Litman Gregory Masters are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Litman Gregory is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock All Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock All Cap Energy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Blackrock All-cap is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Litman Gregory and Blackrock All-cap

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

The idea behind Litman Gregory Masters and Blackrock All Cap Energy 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..