Correlation Between BlackRock AAA and Gold Futures
Can any of the company-specific risk be diversified away by investing in both BlackRock AAA and Gold Futures 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 AAA and Gold Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock AAA CLO and Gold Futures, you can compare the effects of market volatilities on BlackRock AAA and Gold Futures 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 AAA with a short position of Gold Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock AAA and Gold Futures.
Diversification Opportunities for BlackRock AAA and Gold Futures
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlackRock and Gold is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock AAA CLO and Gold Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Futures and BlackRock AAA 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 AAA CLO are associated (or correlated) with Gold Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Futures has no effect on the direction of BlackRock AAA i.e., BlackRock AAA and Gold Futures go up and down completely randomly.
Pair Corralation between BlackRock AAA and Gold Futures
Given the investment horizon of 90 days BlackRock AAA CLO is expected to generate 0.05 times more return on investment than Gold Futures. However, BlackRock AAA CLO is 18.53 times less risky than Gold Futures. It trades about 0.41 of its potential returns per unit of risk. Gold Futures is currently generating about -0.08 per unit of risk. If you would invest 5,164 in BlackRock AAA CLO on August 24, 2024 and sell it today you would earn a total of 29.00 from holding BlackRock AAA CLO or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock AAA CLO vs. Gold Futures
Performance |
| Timeline |
| BlackRock AAA CLO |
| Gold Futures |
BlackRock AAA and Gold Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock AAA and Gold Futures
The main advantage of trading using opposite BlackRock AAA and Gold Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock AAA position performs unexpectedly, Gold Futures 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 Gold Futures will offset losses from the drop in Gold Futures' long position.| BlackRock AAA vs. SPDR Bloomberg 1 3 | BlackRock AAA vs. iShares Ultra Short Term | BlackRock AAA vs. First Trust Enhanced | BlackRock AAA vs. iShares 0 3 Month |
| Gold Futures vs. Micro Gold Futures | Gold Futures vs. Orange Juice | Gold Futures vs. Palladium | Gold Futures vs. Class III Milk |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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