Correlation Between Blackrock Government and Manning Napier
Can any of the company-specific risk be diversified away by investing in both Blackrock Government and Manning Napier 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 Government and Manning Napier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Government Bond and Manning Napier Overseas, you can compare the effects of market volatilities on Blackrock Government and Manning Napier 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 Government with a short position of Manning Napier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Government and Manning Napier.
Diversification Opportunities for Blackrock Government and Manning Napier
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Blackrock and Manning is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Government Bond and Manning Napier Overseas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manning Napier Overseas and Blackrock Government 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 Government Bond are associated (or correlated) with Manning Napier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manning Napier Overseas has no effect on the direction of Blackrock Government i.e., Blackrock Government and Manning Napier go up and down completely randomly.
Pair Corralation between Blackrock Government and Manning Napier
Assuming the 90 days horizon Blackrock Government is expected to generate 1.05 times less return on investment than Manning Napier. But when comparing it to its historical volatility, Blackrock Government Bond is 2.47 times less risky than Manning Napier. It trades about 0.09 of its potential returns per unit of risk. Manning Napier Overseas is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,400 in Manning Napier Overseas on September 12, 2024 and sell it today you would earn a total of 18.00 from holding Manning Napier Overseas or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Government Bond vs. Manning Napier Overseas
Performance |
| Timeline |
| Blackrock Government Bond |
| Manning Napier Overseas |
Blackrock Government and Manning Napier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Government and Manning Napier
The main advantage of trading using opposite Blackrock Government and Manning Napier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Government position performs unexpectedly, Manning Napier 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 Manning Napier will offset losses from the drop in Manning Napier's long position.The idea behind Blackrock Government Bond and Manning Napier Overseas 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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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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