Correlation Between Blackrock Strategic and Blackrock

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

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

Diversification Opportunities for Blackrock Strategic and Blackrock

0.53

Correlation Coefficient

Blackrock Strategic  Blackrock

Very weak diversification

The 3 months correlation between Blackrock and Blackrock is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Strategic Municipal and Blackrock Sm Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Sm Cap and Blackrock Strategic 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 Strategic Municipal are associated (or correlated) with Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Sm Cap has no effect on the direction of Blackrock Strategic i.e., Blackrock Strategic and Blackrock go up and down completely randomly.

Pair Corralation between Blackrock Strategic and Blackrock

Assuming the 90 days horizon Blackrock Strategic Municipal is expected to generate 0.21 times more return on investment than Blackrock. However, Blackrock Strategic Municipal is 4.7 times less risky than Blackrock. It trades about -0.04 of its potential returns per unit of risk. Blackrock Sm Cap is currently generating about -0.19 per unit of risk. If you would invest  1,065  in Blackrock Strategic Municipal on December 1, 2024 and sell it today you would lose (6.00) from holding Blackrock Strategic Municipal or give up 0.56% of portfolio value over 90 days.

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

Blackrock Strategic Municipal  vs.  Blackrock Sm Cap

Blackrock Strategic

Risk-Adjusted Performance

Very Weak

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

Blackrock Sm Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Sm Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Blackrock Strategic and Blackrock

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

The idea behind Blackrock Strategic Municipal and Blackrock Sm 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .