Correlation Between Sierra Tactical and Blackrock Strategic

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

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

Diversification Opportunities for Sierra Tactical and Blackrock Strategic

0.69

Correlation Coefficient

Sierra Tactical  Blackrock Strategic

Poor diversification

The 3 months correlation between Sierra and BlackRock is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Sierra Tactical Bond and Blackrock Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Strategic and Sierra Tactical 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 Sierra Tactical 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 Sierra Tactical i.e., Sierra Tactical and Blackrock Strategic go up and down completely randomly.

Pair Corralation between Sierra Tactical and Blackrock Strategic

Assuming the 90 days horizon Sierra Tactical is expected to generate 1.28 times less return on investment than Blackrock Strategic. In addition to that, Sierra Tactical is 1.29 times more volatile than Blackrock Strategic Income. It trades about 0.13 of its total potential returns per unit of risk. Blackrock Strategic Income is currently generating about 0.22 per unit of volatility. If you would invest  936.00  in Blackrock Strategic Income on December 22, 2024 and sell it today you would earn a total of  19.00  from holding Blackrock Strategic Income or generate 2.03% return on investment over 90 days.

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

Sierra Tactical Bond  vs.  Blackrock Strategic Income

Sierra Tactical Bond

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sierra Tactical Bond are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking indicators, Sierra Tactical 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

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Strategic Income are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, 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 Sierra Tactical and Blackrock Strategic

The main advantage of trading using opposite Sierra Tactical and Blackrock Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sierra Tactical 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 Sierra Tactical Bond and Blackrock Strategic Income 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.