Correlation Between Blackrock Equity and Real Return

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

By analyzing existing cross correlation between Blackrock Equity Dividend and Real Return Fund, you can compare the effects of market volatilities on Blackrock Equity and Real Return 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 Equity with a short position of Real Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Equity and Real Return.

Diversification Opportunities for Blackrock Equity and Real Return

-0.41

Correlation Coefficient

Blackrock Equity  Real Return

Very good diversification

The 3 months correlation between Blackrock and Real is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Equity Dividend and Real Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Real Return Fund and Blackrock Equity 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 Equity Dividend are associated (or correlated) with Real Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Real Return Fund has no effect on the direction of Blackrock Equity i.e., Blackrock Equity and Real Return go up and down completely randomly.

Pair Corralation between Blackrock Equity and Real Return

Assuming the 90 days horizon Blackrock Equity Dividend is expected to generate 2.21 times more return on investment than Real Return. However, Blackrock Equity is 2.21 times more volatile than Real Return Fund. It trades about 0.1 of its potential returns per unit of risk. Real Return Fund is currently generating about -0.02 per unit of risk. If you would invest  2,041  in Blackrock Equity Dividend on September 5, 2024 and sell it today you would earn a total of  80.00  from holding Blackrock Equity Dividend or generate 3.92% return on investment over 90 days.

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

Blackrock Equity Dividend  vs.  Real Return Fund

Blackrock Equity Dividend

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Equity Dividend are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Real Return Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Real Return Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Real Return 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 Equity and Real Return

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

The idea behind Blackrock Equity Dividend and Real Return Fund 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.