Correlation Between Blackrock Gbl and Extended Market
Can any of the company-specific risk be diversified away by investing in both Blackrock Gbl and Extended Market 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 Gbl and Extended Market into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Gbl Lng and Extended Market Index, you can compare the effects of market volatilities on Blackrock Gbl and Extended Market 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 Gbl with a short position of Extended Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Gbl and Extended Market.
Diversification Opportunities for Blackrock Gbl and Extended Market
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Blackrock and Extended is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Gbl Lng and Extended Market Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extended Market Index and Blackrock Gbl 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 Gbl Lng are associated (or correlated) with Extended Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extended Market Index has no effect on the direction of Blackrock Gbl i.e., Blackrock Gbl and Extended Market go up and down completely randomly.
Pair Corralation between Blackrock Gbl and Extended Market
Assuming the 90 days horizon Blackrock Gbl is expected to generate 3.05 times less return on investment than Extended Market. But when comparing it to its historical volatility, Blackrock Gbl Lng is 1.71 times less risky than Extended Market. It trades about 0.15 of its potential returns per unit of risk. Extended Market Index is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,327 in Extended Market Index on August 29, 2024 and sell it today you would earn a total of 188.00 from holding Extended Market Index or generate 8.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Blackrock Gbl Lng vs. Extended Market Index
Performance |
| Timeline |
| Blackrock Gbl Lng |
| Extended Market Index |
Blackrock Gbl and Extended Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Gbl and Extended Market
The main advantage of trading using opposite Blackrock Gbl and Extended Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Gbl position performs unexpectedly, Extended Market 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 Extended Market will offset losses from the drop in Extended Market's long position.| Blackrock Gbl vs. Huber Capital Diversified | Blackrock Gbl vs. American Funds Conservative | Blackrock Gbl vs. Fidelity Advisor Diversified | Blackrock Gbl vs. Delaware Limited Term Diversified |
| Extended Market vs. Queens Road Small | Extended Market vs. Boston Partners Small | Extended Market vs. Hennessy Nerstone Mid | Extended Market vs. Lord Abbett Small |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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