Correlation Between Bondbloxx ETF and Main Sector

Can any of the company-specific risk be diversified away by investing in both Bondbloxx ETF and Main Sector 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 Bondbloxx ETF and Main Sector into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bondbloxx ETF Trust and Main Sector Rotation, you can compare the effects of market volatilities on Bondbloxx ETF and Main Sector 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 Bondbloxx ETF with a short position of Main Sector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bondbloxx ETF and Main Sector.

Diversification Opportunities for Bondbloxx ETF and Main Sector

0.86

Correlation Coefficient

Bondbloxx ETF  Main Sector

Very poor diversification

The 3 months correlation between Bondbloxx and Main is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bondbloxx ETF Trust and Main Sector Rotation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Main Sector Rotation and Bondbloxx ETF 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 Bondbloxx ETF Trust are associated (or correlated) with Main Sector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Main Sector Rotation has no effect on the direction of Bondbloxx ETF i.e., Bondbloxx ETF and Main Sector go up and down completely randomly.

Pair Corralation between Bondbloxx ETF and Main Sector

Given the investment horizon of 90 days Bondbloxx ETF is expected to generate 3.35 times less return on investment than Main Sector. But when comparing it to its historical volatility, Bondbloxx ETF Trust is 35.94 times less risky than Main Sector. It trades about 0.65 of its potential returns per unit of risk. Main Sector Rotation is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,084  in Main Sector Rotation on September 21, 2024 and sell it today you would earn a total of  405.00  from holding Main Sector Rotation or generate 7.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.21%
Values	Daily Returns

Bondbloxx ETF Trust  vs.  Main Sector Rotation

Bondbloxx ETF Trust

Risk-Adjusted Performance

45 of 100

Excellent

Compared to the overall equity markets, risk-adjusted returns on investments in Bondbloxx ETF Trust are ranked lower than 45 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Bondbloxx ETF is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Main Sector Rotation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Main Sector Rotation are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Main Sector is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bondbloxx ETF and Main Sector

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

The idea behind Bondbloxx ETF Trust and Main Sector Rotation 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.