Correlation Between Cref Inflation-linked and Blackrock Acwi

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

By analyzing existing cross correlation between Cref Inflation Linked Bond and Blackrock Acwi Exus, you can compare the effects of market volatilities on Cref Inflation-linked and Blackrock Acwi 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 Cref Inflation-linked with a short position of Blackrock Acwi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cref Inflation-linked and Blackrock Acwi.

Diversification Opportunities for Cref Inflation-linked and Blackrock Acwi

0.9

Correlation Coefficient

Cref Inflation-linked  Blackrock Acwi

Almost no diversification

The 3 months correlation between Cref and Blackrock is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Cref Inflation Linked Bond and Blackrock Acwi Exus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Acwi Exus and Cref Inflation-linked 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 Cref Inflation Linked Bond are associated (or correlated) with Blackrock Acwi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Acwi Exus has no effect on the direction of Cref Inflation-linked i.e., Cref Inflation-linked and Blackrock Acwi go up and down completely randomly.

Pair Corralation between Cref Inflation-linked and Blackrock Acwi

Assuming the 90 days trading horizon Cref Inflation-linked is expected to generate 3.11 times less return on investment than Blackrock Acwi. But when comparing it to its historical volatility, Cref Inflation Linked Bond is 4.35 times less risky than Blackrock Acwi. It trades about 0.24 of its potential returns per unit of risk. Blackrock Acwi Exus is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,019  in Blackrock Acwi Exus on December 21, 2024 and sell it today you would earn a total of  88.00  from holding Blackrock Acwi Exus or generate 8.64% return on investment over 90 days.

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

Cref Inflation Linked Bond  vs.  Blackrock Acwi Exus

Cref Inflation Linked

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cref Inflation Linked Bond are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Cref Inflation-linked is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Acwi Exus

Risk-Adjusted Performance

Good

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

Pair Trading with Cref Inflation-linked and Blackrock Acwi

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

The idea behind Cref Inflation Linked Bond and Blackrock Acwi Exus 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.