Correlation Between Blackrock International and Pax Small
Can any of the company-specific risk be diversified away by investing in both Blackrock International and Pax Small 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 International and Pax Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock International Index and Pax Small Cap, you can compare the effects of market volatilities on Blackrock International and Pax Small 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 International with a short position of Pax Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock International and Pax Small.
Diversification Opportunities for Blackrock International and Pax Small
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Blackrock and Pax is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock International Index and Pax Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pax Small Cap and Blackrock International 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 International Index are associated (or correlated) with Pax Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pax Small Cap has no effect on the direction of Blackrock International i.e., Blackrock International and Pax Small go up and down completely randomly.
Pair Corralation between Blackrock International and Pax Small
Assuming the 90 days horizon Blackrock International Index is expected to under-perform the Pax Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock International Index is 1.68 times less risky than Pax Small. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Pax Small Cap is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,774 in Pax Small Cap on September 1, 2024 and sell it today you would earn a total of 172.00 from holding Pax Small Cap or generate 9.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Blackrock International Index vs. Pax Small Cap
Performance |
| Timeline |
| Blackrock International |
| Pax Small Cap |
Blackrock International and Pax Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock International and Pax Small
The main advantage of trading using opposite Blackrock International and Pax Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock International position performs unexpectedly, Pax Small 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 Pax Small will offset losses from the drop in Pax Small's long position.| Blackrock International vs. Blackrock Midcap Index | Blackrock International vs. Blackrock Small Cap | Blackrock International vs. State Street Equity | Blackrock International vs. T Rowe Price |
| Pax Small vs. Pgim Jennison Diversified | Pax Small vs. Lord Abbett Diversified | Pax Small vs. The Gabelli Small | Pax Small vs. Tax Managed Mid 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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