Correlation Between Blackrock Value and Blackrock Capital

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

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

Diversification Opportunities for Blackrock Value and Blackrock Capital

0.93

Correlation Coefficient

Blackrock Value  Blackrock Capital

Almost no diversification

The 3 months correlation between Blackrock and Blackrock is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Value Opps and Blackrock Capital Appreciation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Capital and Blackrock Value 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 Value Opps are associated (or correlated) with Blackrock Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Capital has no effect on the direction of Blackrock Value i.e., Blackrock Value and Blackrock Capital go up and down completely randomly.

Pair Corralation between Blackrock Value and Blackrock Capital

Assuming the 90 days horizon Blackrock Value Opps is expected to generate 0.98 times more return on investment than Blackrock Capital. However, Blackrock Value Opps is 1.02 times less risky than Blackrock Capital. It trades about 0.2 of its potential returns per unit of risk. Blackrock Capital Appreciation is currently generating about 0.16 per unit of risk. If you would invest  2,618  in Blackrock Value Opps on September 12, 2024 and sell it today you would earn a total of  343.00  from holding Blackrock Value Opps or generate 13.1% return on investment over 90 days.

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

Blackrock Value Opps  vs.  Blackrock Capital Appreciation

Blackrock Value Opps

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Value Opps are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Blackrock Value showed solid returns over the last few months and may actually be approaching a breakup point.

Blackrock Capital

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Capital Appreciation are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Blackrock Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock Value and Blackrock Capital

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

The idea behind Blackrock Value Opps and Blackrock Capital Appreciation 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.