Correlation Between Blackrock International and State Street
Can any of the company-specific risk be diversified away by investing in both Blackrock International and State Street 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 State Street 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 State Street Equity, you can compare the effects of market volatilities on Blackrock International and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock International and State Street.
Diversification Opportunities for Blackrock International and State Street
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Blackrock and State is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock International Index and State Street Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Equity 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Equity has no effect on the direction of Blackrock International i.e., Blackrock International and State Street go up and down completely randomly.
Pair Corralation between Blackrock International and State Street
Assuming the 90 days horizon Blackrock International Index is expected to under-perform the State Street. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock International Index is 1.06 times less risky than State Street. The mutual fund trades about -0.19 of its potential returns per unit of risk. The State Street Equity is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 44,035 in State Street Equity on August 28, 2024 and sell it today you would earn a total of 1,290 from holding State Street Equity or generate 2.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock International Index vs. State Street Equity
Performance |
| Timeline |
| Blackrock International |
| State Street Equity |
Blackrock International and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock International and State Street
The main advantage of trading using opposite Blackrock International and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock International position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.The idea behind Blackrock International Index and State Street Equity 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.
| State Street vs. Conservative Balanced Allocation | State Street vs. Fidelity Advisor Diversified | State Street vs. Blackrock Conservative Prprdptfinstttnl | State Street vs. Calvert Conservative Allocation |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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