Correlation Between Ab Small and Blackrock Advantage

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

By analyzing existing cross correlation between Ab Small Cap and Blackrock Advantage Total, you can compare the effects of market volatilities on Ab Small and Blackrock Advantage 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 Ab Small with a short position of Blackrock Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Blackrock Advantage.

Diversification Opportunities for Ab Small and Blackrock Advantage

0.95

Correlation Coefficient

Ab Small  Blackrock Advantage

Almost no diversification

The 3 months correlation between QUAKX and Blackrock is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Blackrock Advantage Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Advantage Total and Ab Small 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 Ab Small Cap are associated (or correlated) with Blackrock Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Advantage Total has no effect on the direction of Ab Small i.e., Ab Small and Blackrock Advantage go up and down completely randomly.

Pair Corralation between Ab Small and Blackrock Advantage

Assuming the 90 days horizon Ab Small is expected to generate 1.06 times less return on investment than Blackrock Advantage. In addition to that, Ab Small is 1.22 times more volatile than Blackrock Advantage Total. It trades about 0.16 of its total potential returns per unit of risk. Blackrock Advantage Total is currently generating about 0.2 per unit of volatility. If you would invest  2,814  in Blackrock Advantage Total on September 12, 2024 and sell it today you would earn a total of  372.00  from holding Blackrock Advantage Total or generate 13.22% return on investment over 90 days.

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

Ab Small Cap  vs.  Blackrock Advantage Total

Ab Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ab Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Ab Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Blackrock Advantage Total

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Advantage Total are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Blackrock Advantage showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ab Small and Blackrock Advantage

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

The idea behind Ab Small Cap and Blackrock Advantage Total 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.