Correlation Between Eic Value and Blackrock

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

By analyzing existing cross correlation between Eic Value Fund and Blackrock Sm Cap, you can compare the effects of market volatilities on Eic Value and Blackrock 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 Eic Value with a short position of Blackrock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eic Value and Blackrock.

Diversification Opportunities for Eic Value and Blackrock

0.88

Correlation Coefficient

Eic Value  Blackrock

Very poor diversification

The 3 months correlation between Eic and Blackrock is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Eic Value Fund and Blackrock Sm Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Sm Cap and Eic Value 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 Eic Value Fund are associated (or correlated) with Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Sm Cap has no effect on the direction of Eic Value i.e., Eic Value and Blackrock go up and down completely randomly.

Pair Corralation between Eic Value and Blackrock

Assuming the 90 days horizon Eic Value is expected to generate 2.4 times less return on investment than Blackrock. But when comparing it to its historical volatility, Eic Value Fund is 2.27 times less risky than Blackrock. It trades about 0.1 of its potential returns per unit of risk. Blackrock Sm Cap is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,517  in Blackrock Sm Cap on August 26, 2024 and sell it today you would earn a total of  221.00  from holding Blackrock Sm Cap or generate 8.78% return on investment over 90 days.

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

Eic Value Fund  vs.  Blackrock Sm Cap

Eic Value Fund

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eic Value Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Eic Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Sm Cap

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Sm Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Blackrock may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Eic Value and Blackrock

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

The idea behind Eic Value Fund and Blackrock Sm Cap 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.