Correlation Between Blackrock Emerging and Blackrock Small

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

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

Diversification Opportunities for Blackrock Emerging and Blackrock Small

-0.46

Correlation Coefficient

Blackrock Emerging  Blackrock Small

Very good diversification

The 3 months correlation between Blackrock and Blackrock is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Emerging Markets and Blackrock Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Small Cap and Blackrock Emerging 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 Emerging Markets are associated (or correlated) with Blackrock Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Small Cap has no effect on the direction of Blackrock Emerging i.e., Blackrock Emerging and Blackrock Small go up and down completely randomly.

Pair Corralation between Blackrock Emerging and Blackrock Small

Assuming the 90 days horizon Blackrock Emerging Markets is expected to under-perform the Blackrock Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock Emerging Markets is 1.05 times less risky than Blackrock Small. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Blackrock Small Cap is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  2,781  in Blackrock Small Cap on September 12, 2024 and sell it today you would lose (43.00) from holding Blackrock Small Cap or give up 1.55% of portfolio value over 90 days.

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

Blackrock Emerging Markets  vs.  Blackrock Small Cap

Blackrock Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Small Cap

Risk-Adjusted Performance

12 of 100

Good

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

Pair Trading with Blackrock Emerging and Blackrock Small

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

The idea behind Blackrock Emerging Markets and Blackrock Small Cap 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.