Correlation Between Reaves Utility and BlackRock Credit

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

By analyzing existing cross correlation between Reaves Utility If and BlackRock Credit Allocation, you can compare the effects of market volatilities on Reaves Utility and BlackRock Credit 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 Reaves Utility with a short position of BlackRock Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reaves Utility and BlackRock Credit.

Diversification Opportunities for Reaves Utility and BlackRock Credit

0.54

Correlation Coefficient

Reaves Utility  BlackRock Credit

Very weak diversification

The 3 months correlation between Reaves and BlackRock is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Reaves Utility If and BlackRock Credit Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Credit All and Reaves Utility 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 Reaves Utility If are associated (or correlated) with BlackRock Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Credit All has no effect on the direction of Reaves Utility i.e., Reaves Utility and BlackRock Credit go up and down completely randomly.

Pair Corralation between Reaves Utility and BlackRock Credit

Considering the 90-day investment horizon Reaves Utility If is expected to generate 2.68 times more return on investment than BlackRock Credit. However, Reaves Utility is 2.68 times more volatile than BlackRock Credit Allocation. It trades about 0.06 of its potential returns per unit of risk. BlackRock Credit Allocation is currently generating about 0.14 per unit of risk. If you would invest  3,126  in Reaves Utility If on December 29, 2024 and sell it today you would earn a total of  121.00  from holding Reaves Utility If or generate 3.87% return on investment over 90 days.

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

Reaves Utility If  vs.  BlackRock Credit Allocation

Reaves Utility If

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Reaves Utility If are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Reaves Utility is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BlackRock Credit All

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Credit Allocation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, BlackRock Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Reaves Utility and BlackRock Credit

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

The idea behind Reaves Utility If and BlackRock Credit Allocation 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.