Correlation Between Blackrock Inflation and Intermediate Term
Can any of the company-specific risk be diversified away by investing in both Blackrock Inflation and Intermediate Term 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 Inflation and Intermediate Term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Inflation Protected and Intermediate Term Bond Fund, you can compare the effects of market volatilities on Blackrock Inflation and Intermediate Term 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 Inflation with a short position of Intermediate Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Inflation and Intermediate Term.
Diversification Opportunities for Blackrock Inflation and Intermediate Term
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Blackrock and Intermediate is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Inflation Protected and Intermediate Term Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Term Bond and Blackrock Inflation 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 Inflation Protected are associated (or correlated) with Intermediate Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Term Bond has no effect on the direction of Blackrock Inflation i.e., Blackrock Inflation and Intermediate Term go up and down completely randomly.
Pair Corralation between Blackrock Inflation and Intermediate Term
Assuming the 90 days horizon Blackrock Inflation is expected to generate 1.9 times less return on investment than Intermediate Term. But when comparing it to its historical volatility, Blackrock Inflation Protected is 1.17 times less risky than Intermediate Term. It trades about 0.09 of its potential returns per unit of risk. Intermediate Term Bond Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 915.00 in Intermediate Term Bond Fund on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Intermediate Term Bond Fund or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Inflation Protected vs. Intermediate Term Bond Fund
Performance |
| Timeline |
| Blackrock Inflation |
| Intermediate Term Bond |
Blackrock Inflation and Intermediate Term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Inflation and Intermediate Term
The main advantage of trading using opposite Blackrock Inflation and Intermediate Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Inflation position performs unexpectedly, Intermediate Term 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 Intermediate Term will offset losses from the drop in Intermediate Term's long position.The idea behind Blackrock Inflation Protected and Intermediate Term Bond Fund 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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