Correlation Between Managed Account and Blackrock Intern

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

By analyzing existing cross correlation between Managed Account Series and Blackrock Intern Index, you can compare the effects of market volatilities on Managed Account and Blackrock Intern 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 Managed Account with a short position of Blackrock Intern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Managed Account and Blackrock Intern.

Diversification Opportunities for Managed Account and Blackrock Intern

0.88

Correlation Coefficient

Managed Account  Blackrock Intern

Very poor diversification

The 3 months correlation between Managed and Blackrock is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Managed Account Series and Blackrock Intern Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Intern Index and Managed Account 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 Managed Account Series are associated (or correlated) with Blackrock Intern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Intern Index has no effect on the direction of Managed Account i.e., Managed Account and Blackrock Intern go up and down completely randomly.

Pair Corralation between Managed Account and Blackrock Intern

Assuming the 90 days horizon Managed Account is expected to generate 1.83 times less return on investment than Blackrock Intern. But when comparing it to its historical volatility, Managed Account Series is 4.47 times less risky than Blackrock Intern. It trades about 0.34 of its potential returns per unit of risk. Blackrock Intern Index is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,604  in Blackrock Intern Index on December 11, 2024 and sell it today you would earn a total of  45.00  from holding Blackrock Intern Index or generate 2.81% return on investment over 90 days.

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

Managed Account Series  vs.  Blackrock Intern Index

Managed Account Series

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Managed Account Series are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Managed Account is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Intern Index

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Intern Index are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Blackrock Intern is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Managed Account and Blackrock Intern

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

The idea behind Managed Account Series and Blackrock Intern Index 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.