Correlation Between State Street and Blackrock Glbl

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

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

Diversification Opportunities for State Street and Blackrock Glbl

-0.36

Correlation Coefficient

State Street  Blackrock Glbl

Very good diversification

The 3 months correlation between State and Blackrock is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding State Street Equity and Blackrock Glbl Opprtnts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Glbl Opprtnts and State Street 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 State Street Equity are associated (or correlated) with Blackrock Glbl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Glbl Opprtnts has no effect on the direction of State Street i.e., State Street and Blackrock Glbl go up and down completely randomly.

Pair Corralation between State Street and Blackrock Glbl

Assuming the 90 days horizon State Street Equity is expected to under-perform the Blackrock Glbl. In addition to that, State Street is 1.19 times more volatile than Blackrock Glbl Opprtnts. It trades about -0.08 of its total potential returns per unit of risk. Blackrock Glbl Opprtnts is currently generating about 0.25 per unit of volatility. If you would invest  1,863  in Blackrock Glbl Opprtnts on December 21, 2024 and sell it today you would earn a total of  244.00  from holding Blackrock Glbl Opprtnts or generate 13.1% return on investment over 90 days.

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

State Street Equity  vs.  Blackrock Glbl Opprtnts

State Street Equity

Risk-Adjusted Performance

Very Weak

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

Blackrock Glbl Opprtnts

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Glbl Opprtnts are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Blackrock Glbl showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with State Street and Blackrock Glbl

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

The idea behind State Street Equity and Blackrock Glbl Opprtnts 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.