Correlation Between Tri Continental and BlackRock Health

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

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

Diversification Opportunities for Tri Continental and BlackRock Health

0.66

Correlation Coefficient

Tri Continental  BlackRock Health

Poor diversification

The 3 months correlation between Tri and BlackRock is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Tri Continental Closed and BlackRock Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Health Sciences and Tri Continental 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 Tri Continental Closed are associated (or correlated) with BlackRock Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Health Sciences has no effect on the direction of Tri Continental i.e., Tri Continental and BlackRock Health go up and down completely randomly.

Pair Corralation between Tri Continental and BlackRock Health

Allowing for the 90-day total investment horizon Tri Continental Closed is expected to under-perform the BlackRock Health. But the stock apears to be less risky and, when comparing its historical volatility, Tri Continental Closed is 1.74 times less risky than BlackRock Health. The stock trades about -0.02 of its potential returns per unit of risk. The BlackRock Health Sciences is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,416  in BlackRock Health Sciences on December 27, 2024 and sell it today you would earn a total of  80.00  from holding BlackRock Health Sciences or generate 5.65% return on investment over 90 days.

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

Tri Continental Closed  vs.  BlackRock Health Sciences

Tri Continental Closed

Risk-Adjusted Performance

Very Weak

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

BlackRock Health Sciences

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Health Sciences are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, BlackRock Health is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tri Continental and BlackRock Health

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

The idea behind Tri Continental Closed and BlackRock Health Sciences 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .