Correlation Between Blackrock Funds and Blackrock Midcap

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

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

Diversification Opportunities for Blackrock Funds and Blackrock Midcap

-0.48

Correlation Coefficient

Blackrock Funds  Blackrock Midcap

Very good diversification

The 3 months correlation between Blackrock and BlackRock is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Funds and Blackrock Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Midcap Index and Blackrock Funds 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 Funds are associated (or correlated) with Blackrock Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Midcap Index has no effect on the direction of Blackrock Funds i.e., Blackrock Funds and Blackrock Midcap go up and down completely randomly.

Pair Corralation between Blackrock Funds and Blackrock Midcap

Assuming the 90 days horizon Blackrock Funds is expected to generate 1.6 times less return on investment than Blackrock Midcap. But when comparing it to its historical volatility, Blackrock Funds is 1.1 times less risky than Blackrock Midcap. It trades about 0.06 of its potential returns per unit of risk. Blackrock Midcap Index is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,168  in Blackrock Midcap Index on September 5, 2024 and sell it today you would earn a total of  507.00  from holding Blackrock Midcap Index or generate 43.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.66%
Values	Daily Returns

Blackrock Funds   vs.  Blackrock Midcap Index

Blackrock Funds

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Midcap Index

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Midcap Index are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock Funds and Blackrock Midcap

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

The idea behind Blackrock Funds and Blackrock Midcap Index 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 Transaction History module to view history of all your transactions and understand their impact on performance.