Correlation Between BlackRock Capital and Federated Mid

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

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

Diversification Opportunities for BlackRock Capital and Federated Mid

0.64

Correlation Coefficient

BlackRock Capital  Federated Mid

Poor diversification

The 3 months correlation between BlackRock and Federated is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Capital Allocation and Federated Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mid Cap and BlackRock Capital 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 BlackRock Capital Allocation are associated (or correlated) with Federated Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mid Cap has no effect on the direction of BlackRock Capital i.e., BlackRock Capital and Federated Mid go up and down completely randomly.

Pair Corralation between BlackRock Capital and Federated Mid

Given the investment horizon of 90 days BlackRock Capital is expected to generate 1.11 times less return on investment than Federated Mid. But when comparing it to its historical volatility, BlackRock Capital Allocation is 1.53 times less risky than Federated Mid. It trades about 0.17 of its potential returns per unit of risk. Federated Mid Cap Index is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,437  in Federated Mid Cap Index on May 6, 2025 and sell it today you would earn a total of  103.00  from holding Federated Mid Cap Index or generate 7.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

BlackRock Capital Allocation  vs.  Federated Mid Cap Index

BlackRock Capital

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Capital Allocation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, BlackRock Capital may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Federated Mid Cap

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mid Cap Index are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Federated Mid may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with BlackRock Capital and Federated Mid

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

The idea behind BlackRock Capital Allocation and Federated Mid Cap Index 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.