Correlation Between Amundi EUR and BlackRock ESG

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

By analyzing existing cross correlation between Amundi EUR High and BlackRock ESG Multi Asset, you can compare the effects of market volatilities on Amundi EUR and BlackRock ESG 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 Amundi EUR with a short position of BlackRock ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amundi EUR and BlackRock ESG.

Diversification Opportunities for Amundi EUR and BlackRock ESG

0.87

Correlation Coefficient

Amundi EUR  BlackRock ESG

Very poor diversification

The 3 months correlation between Amundi and BlackRock is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Amundi EUR High and BlackRock ESG Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock ESG Multi and Amundi EUR 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 Amundi EUR High are associated (or correlated) with BlackRock ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock ESG Multi has no effect on the direction of Amundi EUR i.e., Amundi EUR and BlackRock ESG go up and down completely randomly.

Pair Corralation between Amundi EUR and BlackRock ESG

Assuming the 90 days trading horizon Amundi EUR is expected to generate 1.41 times less return on investment than BlackRock ESG. But when comparing it to its historical volatility, Amundi EUR High is 1.68 times less risky than BlackRock ESG. It trades about 0.11 of its potential returns per unit of risk. BlackRock ESG Multi Asset is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  521.00  in BlackRock ESG Multi Asset on October 11, 2024 and sell it today you would earn a total of  101.00  from holding BlackRock ESG Multi Asset or generate 19.39% return on investment over 90 days.

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

Amundi EUR High  vs.  BlackRock ESG Multi Asset

Amundi EUR High

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amundi EUR High are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Amundi EUR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BlackRock ESG Multi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock ESG Multi Asset are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, BlackRock ESG 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 Amundi EUR and BlackRock ESG

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

The idea behind Amundi EUR High and BlackRock ESG Multi Asset 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.