Correlation Between Liberty All and BlackRock Science

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

By analyzing existing cross correlation between Liberty All Star and BlackRock Science and, you can compare the effects of market volatilities on Liberty All and BlackRock Science 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 Liberty All with a short position of BlackRock Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty All and BlackRock Science.

Diversification Opportunities for Liberty All and BlackRock Science

0.9

Correlation Coefficient

Liberty All  BlackRock Science

Almost no diversification

The 3 months correlation between Liberty and BlackRock is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Liberty All Star and BlackRock Science and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Science and Liberty All 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 Liberty All Star are associated (or correlated) with BlackRock Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Science has no effect on the direction of Liberty All i.e., Liberty All and BlackRock Science go up and down completely randomly.

Pair Corralation between Liberty All and BlackRock Science

Considering the 90-day investment horizon Liberty All is expected to generate 1.79 times less return on investment than BlackRock Science. But when comparing it to its historical volatility, Liberty All Star is 1.3 times less risky than BlackRock Science. It trades about 0.17 of its potential returns per unit of risk. BlackRock Science and is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,822  in BlackRock Science and on August 31, 2024 and sell it today you would earn a total of  310.00  from holding BlackRock Science and or generate 17.01% return on investment over 90 days.

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

Liberty All Star  vs.  BlackRock Science and

Liberty All Star

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Liberty All Star are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat weak basic indicators, Liberty All may actually be approaching a critical reversion point that can send shares even higher in December 2024.

BlackRock Science

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Science and are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, BlackRock Science showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Liberty All and BlackRock Science

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

The idea behind Liberty All Star and BlackRock Science and 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.