Correlation Between Saat Moderate and Blackrock Small

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

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

Diversification Opportunities for Saat Moderate and Blackrock Small

0.26

Correlation Coefficient

Saat Moderate  Blackrock Small

Modest diversification

The 3 months correlation between Saat and Blackrock is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Saat Moderate Strategy and Blackrock Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Small Cap and Saat Moderate 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 Saat Moderate Strategy are associated (or correlated) with Blackrock Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Small Cap has no effect on the direction of Saat Moderate i.e., Saat Moderate and Blackrock Small go up and down completely randomly.

Pair Corralation between Saat Moderate and Blackrock Small

Assuming the 90 days horizon Saat Moderate Strategy is expected to under-perform the Blackrock Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Saat Moderate Strategy is 4.91 times less risky than Blackrock Small. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Blackrock Small Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,333  in Blackrock Small Cap on September 26, 2024 and sell it today you would earn a total of  37.00  from holding Blackrock Small Cap or generate 2.78% return on investment over 90 days.

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

Saat Moderate Strategy  vs.  Blackrock Small Cap

Saat Moderate Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Blackrock Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Saat Moderate and Blackrock Small

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

The idea behind Saat Moderate Strategy and Blackrock Small Cap 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.