Correlation Between Bondbloxx ETF and China Merchants

Can any of the company-specific risk be diversified away by investing in both Bondbloxx ETF and China Merchants 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 China Merchants 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 China Merchants Bank, you can compare the effects of market volatilities on Bondbloxx ETF and China Merchants 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 China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bondbloxx ETF and China Merchants.

Diversification Opportunities for Bondbloxx ETF and China Merchants

-0.58

Correlation Coefficient

Bondbloxx ETF  China Merchants

Excellent diversification

The 3 months correlation between Bondbloxx and China is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bondbloxx ETF Trust and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank 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 China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Bank has no effect on the direction of Bondbloxx ETF i.e., Bondbloxx ETF and China Merchants go up and down completely randomly.

Pair Corralation between Bondbloxx ETF and China Merchants

Given the investment horizon of 90 days Bondbloxx ETF Trust is expected to under-perform the China Merchants. But the etf apears to be less risky and, when comparing its historical volatility, Bondbloxx ETF Trust is 4.64 times less risky than China Merchants. The etf trades about -0.02 of its potential returns per unit of risk. The China Merchants Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  488.00  in China Merchants Bank on December 5, 2024 and sell it today you would lose (1.00) from holding China Merchants Bank or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.19%
Values	Daily Returns

Bondbloxx ETF Trust  vs.  China Merchants Bank

Bondbloxx ETF Trust

Risk-Adjusted Performance

Very Weak

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

China Merchants Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Merchants Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, China Merchants is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bondbloxx ETF and China Merchants

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

The idea behind Bondbloxx ETF Trust and China Merchants Bank 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.