Correlation Between BGF Global and BlackRock Global

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

By analyzing existing cross correlation between BGF Global Allocation and BlackRock Global Funds, you can compare the effects of market volatilities on BGF Global and BlackRock 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 BGF Global with a short position of BlackRock Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Global and BlackRock Global.

Diversification Opportunities for BGF Global and BlackRock Global

0.24

Correlation Coefficient

BGF Global  BlackRock Global

Modest diversification

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

Pair Corralation between BGF Global and BlackRock Global

Assuming the 90 days trading horizon BGF Global Allocation is expected to under-perform the BlackRock Global. But the fund apears to be less risky and, when comparing its historical volatility, BGF Global Allocation is 1.56 times less risky than BlackRock Global. The fund trades about -0.11 of its potential returns per unit of risk. The BlackRock Global Funds is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,983  in BlackRock Global Funds on December 24, 2024 and sell it today you would earn a total of  275.00  from holding BlackRock Global Funds or generate 5.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

BGF Global Allocation  vs.  BlackRock Global Funds

BGF Global Allocation

Risk-Adjusted Performance

Very Weak

Over the last 90 days BGF Global Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical and fundamental indicators, BGF Global is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

BlackRock Global Funds

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Global Funds are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Even with relatively steady basic indicators, BlackRock Global is not utilizing all of its potentials. The recent stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with BGF Global and BlackRock Global

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

The idea behind BGF Global Allocation and BlackRock Global Funds 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.