Correlation Between Capital World and Blackrock Strategic

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

By analyzing existing cross correlation between Capital World Bond and Blackrock Strategic Global, you can compare the effects of market volatilities on Capital World and Blackrock Strategic 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 Capital World with a short position of Blackrock Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and Blackrock Strategic.

Diversification Opportunities for Capital World and Blackrock Strategic

0.99

Correlation Coefficient

Capital World  Blackrock Strategic

No risk reduction

The 3 months correlation between Capital and Blackrock is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Bond and Blackrock Strategic Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Strategic and Capital World 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 Capital World Bond are associated (or correlated) with Blackrock Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Strategic has no effect on the direction of Capital World i.e., Capital World and Blackrock Strategic go up and down completely randomly.

Pair Corralation between Capital World and Blackrock Strategic

Assuming the 90 days horizon Capital World Bond is expected to under-perform the Blackrock Strategic. In addition to that, Capital World is 1.12 times more volatile than Blackrock Strategic Global. It trades about -0.18 of its total potential returns per unit of risk. Blackrock Strategic Global is currently generating about -0.14 per unit of volatility. If you would invest  540.00  in Blackrock Strategic Global on September 13, 2024 and sell it today you would lose (14.00) from holding Blackrock Strategic Global or give up 2.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Capital World Bond  vs.  Blackrock Strategic Global

Capital World Bond

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Capital World and Blackrock Strategic

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

The idea behind Capital World Bond and Blackrock Strategic Global 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.