Correlation Between Blackrock Tactical and State Street

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

By analyzing existing cross correlation between Blackrock Tactical Opportunities and State Street Smallmid, you can compare the effects of market volatilities on Blackrock Tactical and State Street 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 Tactical with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Tactical and State Street.

Diversification Opportunities for Blackrock Tactical and State Street

0.89

Correlation Coefficient

Blackrock Tactical  State Street

Very poor diversification

The 3 months correlation between Blackrock and State is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Tactical Opportuniti and State Street Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Smallmid and Blackrock Tactical 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 Tactical Opportunities are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Smallmid has no effect on the direction of Blackrock Tactical i.e., Blackrock Tactical and State Street go up and down completely randomly.

Pair Corralation between Blackrock Tactical and State Street

Assuming the 90 days horizon Blackrock Tactical Opportunities is expected to generate 0.25 times more return on investment than State Street. However, Blackrock Tactical Opportunities is 4.06 times less risky than State Street. It trades about 0.02 of its potential returns per unit of risk. State Street Smallmid is currently generating about -0.24 per unit of risk. If you would invest  1,459  in Blackrock Tactical Opportunities on September 27, 2024 and sell it today you would earn a total of  2.00  from holding Blackrock Tactical Opportunities or generate 0.14% return on investment over 90 days.

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

Blackrock Tactical Opportuniti  vs.  State Street Smallmid

Blackrock Tactical

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Tactical Opportunities are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

State Street Smallmid

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in State Street Smallmid are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, State Street 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 Tactical and State Street

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

The idea behind Blackrock Tactical Opportunities and State Street Smallmid 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 Global Correlations module to find global opportunities by holding instruments from different markets.