Correlation Between Blackrock International and Blackrock Focus

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

By analyzing existing cross correlation between Blackrock International Dividend and Blackrock Focus Growth, you can compare the effects of market volatilities on Blackrock International and Blackrock Focus 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 International with a short position of Blackrock Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock International and Blackrock Focus.

Diversification Opportunities for Blackrock International and Blackrock Focus

0.82

Correlation Coefficient

Blackrock International  Blackrock Focus

Very poor diversification

The 3 months correlation between Blackrock and Blackrock is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock International Divide and Blackrock Focus Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Focus Growth and Blackrock International 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 International Dividend are associated (or correlated) with Blackrock Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Focus Growth has no effect on the direction of Blackrock International i.e., Blackrock International and Blackrock Focus go up and down completely randomly.

Pair Corralation between Blackrock International and Blackrock Focus

Assuming the 90 days horizon Blackrock International is expected to generate 3.12 times less return on investment than Blackrock Focus. But when comparing it to its historical volatility, Blackrock International Dividend is 1.68 times less risky than Blackrock Focus. It trades about 0.01 of its potential returns per unit of risk. Blackrock Focus Growth is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  746.00  in Blackrock Focus Growth on July 11, 2024 and sell it today you would earn a total of  3.00  from holding Blackrock Focus Growth or generate 0.4% return on investment over 90 days.

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

Blackrock International Divide  vs.  Blackrock Focus Growth

Blackrock International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock International Dividend has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Blackrock International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Focus Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Focus Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock Focus is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock International and Blackrock Focus

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

The idea behind Blackrock International Dividend and Blackrock Focus Growth 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.