Correlation Between Blackrock Advantage and Blackrock Large

Can any of the company-specific risk be diversified away by investing in both Blackrock Advantage and Blackrock Large 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 Blackrock Large 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 Blackrock Large Cap, you can compare the effects of market volatilities on Blackrock Advantage and Blackrock Large 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 Blackrock Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Advantage and Blackrock Large.

Diversification Opportunities for Blackrock Advantage and Blackrock Large

0.99

Correlation Coefficient

Blackrock Advantage  Blackrock Large

No risk reduction

The 3 months correlation between Blackrock and Blackrock is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Advantage Total and Blackrock Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Large Cap 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 Blackrock Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Large Cap has no effect on the direction of Blackrock Advantage i.e., Blackrock Advantage and Blackrock Large go up and down completely randomly.

Pair Corralation between Blackrock Advantage and Blackrock Large

Assuming the 90 days horizon Blackrock Advantage Total is expected to generate 1.59 times more return on investment than Blackrock Large. However, Blackrock Advantage is 1.59 times more volatile than Blackrock Large Cap. It trades about 0.2 of its potential returns per unit of risk. Blackrock Large Cap is currently generating about 0.17 per unit of risk. If you would invest  2,833  in Blackrock Advantage Total on September 3, 2024 and sell it today you would earn a total of  378.00  from holding Blackrock Advantage Total or generate 13.34% return on investment over 90 days.

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

Blackrock Advantage Total  vs.  Blackrock Large Cap

Blackrock Advantage Total

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Advantage Total are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Blackrock Advantage showed solid returns over the last few months and may actually be approaching a breakup point.

Blackrock Large Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Large Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Blackrock Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock Advantage and Blackrock Large

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

The idea behind Blackrock Advantage Total and Blackrock Large 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.