Correlation Between Blackrock Focus and Blackrock Smid

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

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

Diversification Opportunities for Blackrock Focus and Blackrock Smid

0.97

Correlation Coefficient

Blackrock Focus  Blackrock Smid

Almost no diversification

The 3 months correlation between Blackrock and Blackrock is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Focus Growth and Blackrock Smid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Smid Cap and Blackrock Focus 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 Focus Growth are associated (or correlated) with Blackrock Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Smid Cap has no effect on the direction of Blackrock Focus i.e., Blackrock Focus and Blackrock Smid go up and down completely randomly.

Pair Corralation between Blackrock Focus and Blackrock Smid

Assuming the 90 days horizon Blackrock Focus Growth is expected to generate 0.94 times more return on investment than Blackrock Smid. However, Blackrock Focus Growth is 1.06 times less risky than Blackrock Smid. It trades about -0.11 of its potential returns per unit of risk. Blackrock Smid Cap Growth is currently generating about -0.11 per unit of risk. If you would invest  793.00  in Blackrock Focus Growth on December 23, 2024 and sell it today you would lose (83.00) from holding Blackrock Focus Growth or give up 10.47% of portfolio value over 90 days.

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

Blackrock Focus Growth  vs.  Blackrock Smid Cap Growth

Blackrock Focus Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Focus Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Blackrock Smid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Smid Cap Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking signals 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 Focus and Blackrock Smid

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

The idea behind Blackrock Focus Growth and Blackrock Smid Cap Growth 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.