Correlation Between IShares 0 and BlackRock AAA

Can any of the company-specific risk be diversified away by investing in both IShares 0 and BlackRock AAA 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 IShares 0 and BlackRock AAA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares 0 3 Month and BlackRock AAA CLO, you can compare the effects of market volatilities on IShares 0 and BlackRock AAA 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 IShares 0 with a short position of BlackRock AAA. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares 0 and BlackRock AAA.

Diversification Opportunities for IShares 0 and BlackRock AAA

0.99

Correlation Coefficient

IShares 0  BlackRock AAA

No risk reduction

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

Pair Corralation between IShares 0 and BlackRock AAA

Given the investment horizon of 90 days IShares 0 is expected to generate 1.34 times less return on investment than BlackRock AAA. But when comparing it to its historical volatility, iShares 0 3 Month is 3.12 times less risky than BlackRock AAA. It trades about 1.15 of its potential returns per unit of risk. BlackRock AAA CLO is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest  5,103  in BlackRock AAA CLO on September 14, 2024 and sell it today you would earn a total of  78.00  from holding BlackRock AAA CLO or generate 1.53% return on investment over 90 days.

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

iShares 0 3 Month  vs.  BlackRock AAA CLO

iShares 0 3

Risk-Adjusted Performance

90 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in iShares 0 3 Month are ranked lower than 90 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares 0 is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

BlackRock AAA CLO

Risk-Adjusted Performance

38 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock AAA CLO are ranked lower than 38 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, BlackRock AAA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with IShares 0 and BlackRock AAA

The main advantage of trading using opposite IShares 0 and BlackRock AAA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares 0 position performs unexpectedly, BlackRock AAA 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 AAA will offset losses from the drop in BlackRock AAA's long position.

The idea behind iShares 0 3 Month and BlackRock AAA CLO 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.