Correlation Between Blackrock Enhanced and CBH
Can any of the company-specific risk be diversified away by investing in both Blackrock Enhanced and CBH 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 Enhanced and CBH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Enhanced Government and CBH, you can compare the effects of market volatilities on Blackrock Enhanced and CBH 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 Enhanced with a short position of CBH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Enhanced and CBH.
Diversification Opportunities for Blackrock Enhanced and CBH
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Blackrock and CBH is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Government and CBH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBH and Blackrock Enhanced 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 Enhanced Government are associated (or correlated) with CBH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBH has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and CBH go up and down completely randomly.
Pair Corralation between Blackrock Enhanced and CBH
Considering the 90-day investment horizon Blackrock Enhanced Government is expected to generate 2.95 times more return on investment than CBH. However, Blackrock Enhanced is 2.95 times more volatile than CBH. It trades about 0.03 of its potential returns per unit of risk. CBH is currently generating about 0.07 per unit of risk. If you would invest 904.00 in Blackrock Enhanced Government on September 3, 2024 and sell it today you would earn a total of 145.00 from holding Blackrock Enhanced Government or generate 16.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 87.45% |
| Values | Daily Returns |
Blackrock Enhanced Government vs. CBH
Performance |
| Timeline |
| Blackrock Enhanced |
| CBH |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Blackrock Enhanced and CBH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Enhanced and CBH
The main advantage of trading using opposite Blackrock Enhanced and CBH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Enhanced position performs unexpectedly, CBH 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 CBH will offset losses from the drop in CBH's long position.The idea behind Blackrock Enhanced Government and CBH 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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