Correlation Between International Equity and Blackrock Glbl

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

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

Diversification Opportunities for International Equity and Blackrock Glbl

0.6

Correlation Coefficient

International Equity  Blackrock Glbl

Poor diversification

The 3 months correlation between International and Blackrock is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding International Equity Series and Blackrock Glbl Sm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Glbl Sm and International Equity 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 International Equity Series 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 Sm has no effect on the direction of International Equity i.e., International Equity and Blackrock Glbl go up and down completely randomly.

Pair Corralation between International Equity and Blackrock Glbl

Assuming the 90 days horizon International Equity is expected to generate 3.48 times less return on investment than Blackrock Glbl. In addition to that, International Equity is 1.08 times more volatile than Blackrock Glbl Sm. It trades about 0.01 of its total potential returns per unit of risk. Blackrock Glbl Sm is currently generating about 0.06 per unit of volatility. If you would invest  2,102  in Blackrock Glbl Sm on September 29, 2024 and sell it today you would earn a total of  565.00  from holding Blackrock Glbl Sm or generate 26.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

International Equity Series  vs.  Blackrock Glbl Sm

International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Equity Series has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Blackrock Glbl Sm

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with International Equity and Blackrock Glbl

The main advantage of trading using opposite International Equity and Blackrock Glbl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Equity 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 International Equity Series and Blackrock Glbl Sm 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.