Correlation Between Blackrock and Federated Institutional
Can any of the company-specific risk be diversified away by investing in both Blackrock and Federated Institutional 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 and Federated Institutional into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Hi Yld and Federated Institutional High, you can compare the effects of market volatilities on Blackrock and Federated Institutional 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 with a short position of Federated Institutional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and Federated Institutional.
Diversification Opportunities for Blackrock and Federated Institutional
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Blackrock and FEDERATED is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Hi Yld and Federated Institutional High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Institutional and Blackrock 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 Hi Yld are associated (or correlated) with Federated Institutional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Institutional has no effect on the direction of Blackrock i.e., Blackrock and Federated Institutional go up and down completely randomly.
Pair Corralation between Blackrock and Federated Institutional
Assuming the 90 days horizon Blackrock Hi Yld is expected to generate 0.79 times more return on investment than Federated Institutional. However, Blackrock Hi Yld is 1.26 times less risky than Federated Institutional. It trades about 0.31 of its potential returns per unit of risk. Federated Institutional High is currently generating about 0.2 per unit of risk. If you would invest 714.00 in Blackrock Hi Yld on August 31, 2024 and sell it today you would earn a total of 6.00 from holding Blackrock Hi Yld or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Hi Yld vs. Federated Institutional High
Performance |
| Timeline |
| Blackrock Hi Yld |
| Federated Institutional |
Blackrock and Federated Institutional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock and Federated Institutional
The main advantage of trading using opposite Blackrock and Federated Institutional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock position performs unexpectedly, Federated Institutional 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 Institutional will offset losses from the drop in Federated Institutional's long position.| Blackrock vs. Multisector Bond Sma | Blackrock vs. Versatile Bond Portfolio | Blackrock vs. Artisan High Income | Blackrock vs. Legg Mason Partners |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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