Correlation Between Blackrock Health and Equity Growth

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

By analyzing existing cross correlation between Blackrock Health Sciences and Equity Growth Fund, you can compare the effects of market volatilities on Blackrock Health and Equity Growth 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 Health with a short position of Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Health and Equity Growth.

Diversification Opportunities for Blackrock Health and Equity Growth

-0.15

Correlation Coefficient

Blackrock Health  Equity Growth

Good diversification

The 3 months correlation between Blackrock and Equity is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Health Sciences and Equity Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth and Blackrock Health 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 Health Sciences are associated (or correlated) with Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth has no effect on the direction of Blackrock Health i.e., Blackrock Health and Equity Growth go up and down completely randomly.

Pair Corralation between Blackrock Health and Equity Growth

Assuming the 90 days horizon Blackrock Health Sciences is expected to under-perform the Equity Growth. In addition to that, Blackrock Health is 1.34 times more volatile than Equity Growth Fund. It trades about -0.2 of its total potential returns per unit of risk. Equity Growth Fund is currently generating about 0.09 per unit of volatility. If you would invest  3,304  in Equity Growth Fund on October 6, 2024 and sell it today you would earn a total of  101.00  from holding Equity Growth Fund or generate 3.06% return on investment over 90 days.

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

Blackrock Health Sciences  vs.  Equity Growth Fund

Blackrock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Health Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Equity Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Equity Growth Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Equity Growth 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 Health and Equity Growth

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

The idea behind Blackrock Health Sciences and Equity Growth Fund 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.