Correlation Between Blackrock Financial and Gmo Global

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

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

Diversification Opportunities for Blackrock Financial and Gmo Global

0.0

Correlation Coefficient

Blackrock Financial  Gmo Global

Pay attention - limited upside

The 3 months correlation between Blackrock and Gmo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Financial Institutio and Gmo Global Developed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Developed and Blackrock Financial 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 Financial Institutions are associated (or correlated) with Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Developed has no effect on the direction of Blackrock Financial i.e., Blackrock Financial and Gmo Global go up and down completely randomly.

Pair Corralation between Blackrock Financial and Gmo Global

Assuming the 90 days horizon Blackrock Financial is expected to generate 4.32 times less return on investment than Gmo Global. But when comparing it to its historical volatility, Blackrock Financial Institutions is 5.12 times less risky than Gmo Global. It trades about 0.09 of its potential returns per unit of risk. Gmo Global Developed is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,290  in Gmo Global Developed on October 24, 2024 and sell it today you would earn a total of  305.00  from holding Gmo Global Developed or generate 13.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Blackrock Financial Institutio  vs.  Gmo Global Developed

Blackrock Financial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gmo Global Developed

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gmo Global Developed are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Gmo Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Financial and Gmo Global

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

The idea behind Blackrock Financial Institutions and Gmo Global Developed 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.