Correlation Between Blackrock and Fs Multi-strategy

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

By analyzing existing cross correlation between Blackrock Pa Muni and Fs Multi Strategy Alt, you can compare the effects of market volatilities on Blackrock and Fs Multi-strategy 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 with a short position of Fs Multi-strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Fs Multi-strategy.

Diversification Opportunities for Blackrock and Fs Multi-strategy

0.73

Correlation Coefficient

Blackrock  Fs Multi-strategy

Poor diversification

The 3 months correlation between Blackrock and FSMMX is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Pa Muni and Fs Multi Strategy Alt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fs Multi Strategy and Blackrock 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 Pa Muni are associated (or correlated) with Fs Multi-strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fs Multi Strategy has no effect on the direction of Blackrock i.e., Blackrock and Fs Multi-strategy go up and down completely randomly.

Pair Corralation between Blackrock and Fs Multi-strategy

Assuming the 90 days horizon Blackrock Pa Muni is expected to under-perform the Fs Multi-strategy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock Pa Muni is 1.77 times less risky than Fs Multi-strategy. The mutual fund trades about -0.45 of its potential returns per unit of risk. The Fs Multi Strategy Alt is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  1,136  in Fs Multi Strategy Alt on October 11, 2024 and sell it today you would lose (30.00) from holding Fs Multi Strategy Alt or give up 2.64% of portfolio value over 90 days.

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

Blackrock Pa Muni  vs.  Fs Multi Strategy Alt

Blackrock Pa Muni

Risk-Adjusted Performance

0 of 100

Very Weak

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

Fs Multi Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fs Multi Strategy Alt has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Fs Multi-strategy 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 and Fs Multi-strategy

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

The idea behind Blackrock Pa Muni and Fs Multi Strategy Alt 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..