Correlation Between Blackrock Advantage and Ishares Sp

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

By analyzing existing cross correlation between Blackrock Advantage Total and Ishares Sp 500, you can compare the effects of market volatilities on Blackrock Advantage and Ishares Sp 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 Advantage with a short position of Ishares Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Advantage and Ishares Sp.

Diversification Opportunities for Blackrock Advantage and Ishares Sp

0.8

Correlation Coefficient

Blackrock Advantage  Ishares Sp

Very poor diversification

The 3 months correlation between Blackrock and Ishares is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Advantage Total and Ishares Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Sp 500 and Blackrock Advantage 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 Advantage Total are associated (or correlated) with Ishares Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Sp 500 has no effect on the direction of Blackrock Advantage i.e., Blackrock Advantage and Ishares Sp go up and down completely randomly.

Pair Corralation between Blackrock Advantage and Ishares Sp

Assuming the 90 days horizon Blackrock Advantage Total is expected to generate 1.33 times more return on investment than Ishares Sp. However, Blackrock Advantage is 1.33 times more volatile than Ishares Sp 500. It trades about 0.07 of its potential returns per unit of risk. Ishares Sp 500 is currently generating about 0.07 per unit of risk. If you would invest  2,926  in Blackrock Advantage Total on October 23, 2024 and sell it today you would earn a total of  131.00  from holding Blackrock Advantage Total or generate 4.48% return on investment over 90 days.

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

Blackrock Advantage Total  vs.  Ishares Sp 500

Blackrock Advantage Total

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Advantage Total are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Advantage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ishares Sp 500

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ishares Sp 500 are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Ishares Sp 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 Advantage and Ishares Sp

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

The idea behind Blackrock Advantage Total and Ishares Sp 500 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..