Correlation Between Mondrian Emerging and Blackrock

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

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

Diversification Opportunities for Mondrian Emerging and Blackrock

0.2

Correlation Coefficient

Mondrian Emerging  Blackrock

Modest diversification

The 3 months correlation between Mondrian and Blackrock is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mondrian Emerging Markets and Blackrock Hi Yld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Hi Yld and Mondrian Emerging 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 Mondrian Emerging Markets 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 Hi Yld has no effect on the direction of Mondrian Emerging i.e., Mondrian Emerging and Blackrock go up and down completely randomly.

Pair Corralation between Mondrian Emerging and Blackrock

Assuming the 90 days horizon Mondrian Emerging Markets is expected to under-perform the Blackrock. In addition to that, Mondrian Emerging is 6.78 times more volatile than Blackrock Hi Yld. It trades about -0.01 of its total potential returns per unit of risk. Blackrock Hi Yld is currently generating about 0.18 per unit of volatility. If you would invest  710.00  in Blackrock Hi Yld on September 3, 2024 and sell it today you would earn a total of  11.00  from holding Blackrock Hi Yld or generate 1.55% return on investment over 90 days.

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

Mondrian Emerging Markets  vs.  Blackrock Hi Yld

Mondrian Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Hi Yld

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Hi Yld are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Blackrock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mondrian Emerging and Blackrock

The main advantage of trading using opposite Mondrian Emerging and Blackrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mondrian Emerging 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 Mondrian Emerging Markets and Blackrock Hi Yld 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.