Correlation Between Blackrock Gbl and Multimanager Lifestyle

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Can any of the company-specific risk be diversified away by investing in both Blackrock Gbl and Multimanager Lifestyle 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 Gbl and Multimanager Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Gbl Alloc and Multimanager Lifestyle Aggressive, you can compare the effects of market volatilities on Blackrock Gbl and Multimanager Lifestyle 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 Gbl with a short position of Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Gbl and Multimanager Lifestyle.

Diversification Opportunities for Blackrock Gbl and Multimanager Lifestyle

0.85
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Blackrock and Multimanager is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Gbl Alloc and Multimanager Lifestyle Aggress in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle and Blackrock Gbl 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 Gbl Alloc are associated (or correlated) with Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of Blackrock Gbl i.e., Blackrock Gbl and Multimanager Lifestyle go up and down completely randomly.

Pair Corralation between Blackrock Gbl and Multimanager Lifestyle

Assuming the 90 days horizon Blackrock Gbl Alloc is expected to generate 0.73 times more return on investment than Multimanager Lifestyle. However, Blackrock Gbl Alloc is 1.38 times less risky than Multimanager Lifestyle. It trades about 0.11 of its potential returns per unit of risk. Multimanager Lifestyle Aggressive is currently generating about 0.06 per unit of risk. If you would invest  1,986  in Blackrock Gbl Alloc on September 12, 2024 and sell it today you would earn a total of  17.00  from holding Blackrock Gbl Alloc or generate 0.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Blackrock Gbl Alloc  vs.  Multimanager Lifestyle Aggress

 Performance 
       Timeline  
Blackrock Gbl Alloc 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Gbl Alloc are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Gbl is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Multimanager Lifestyle 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Multimanager Lifestyle Aggressive are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Multimanager Lifestyle is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Gbl and Multimanager Lifestyle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Blackrock Gbl and Multimanager Lifestyle

The main advantage of trading using opposite Blackrock Gbl and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Gbl position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle's long position.
The idea behind Blackrock Gbl Alloc and Multimanager Lifestyle Aggressive 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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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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