Correlation Between FAM and Blackrock Enhanced
Can any of the company-specific risk be diversified away by investing in both FAM and Blackrock Enhanced 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 FAM and Blackrock Enhanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAM and Blackrock Enhanced Government, you can compare the effects of market volatilities on FAM and Blackrock Enhanced 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 FAM with a short position of Blackrock Enhanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAM and Blackrock Enhanced.
Diversification Opportunities for FAM and Blackrock Enhanced
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FAM and Blackrock is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding FAM and Blackrock Enhanced Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Enhanced and FAM 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 FAM are associated (or correlated) with Blackrock Enhanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Enhanced has no effect on the direction of FAM i.e., FAM and Blackrock Enhanced go up and down completely randomly.
Pair Corralation between FAM and Blackrock Enhanced
Considering the 90-day investment horizon FAM is expected to generate 0.85 times more return on investment than Blackrock Enhanced. However, FAM is 1.18 times less risky than Blackrock Enhanced. It trades about 0.35 of its potential returns per unit of risk. Blackrock Enhanced Government is currently generating about -0.01 per unit of risk. If you would invest 647.00 in FAM on September 12, 2024 and sell it today you would earn a total of 27.00 from holding FAM or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 14.29% |
| Values | Daily Returns |
FAM vs. Blackrock Enhanced Government
Performance |
| Timeline |
| FAM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
| Blackrock Enhanced |
FAM and Blackrock Enhanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FAM and Blackrock Enhanced
The main advantage of trading using opposite FAM and Blackrock Enhanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAM position performs unexpectedly, Blackrock Enhanced 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 Blackrock Enhanced will offset losses from the drop in Blackrock Enhanced's long position.| FAM vs. Brookfield Real Assets | FAM vs. Guggenheim Strategic Opportunities | FAM vs. Cornerstone Strategic Return | FAM vs. Cornerstone Strategic Value |
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.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| CEOs Directory Screen CEOs from public companies around the world |