Correlation Between Multisector Bond and Blackrock
Can any of the company-specific risk be diversified away by investing in both Multisector Bond and Blackrock 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 Multisector Bond and Blackrock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multisector Bond Sma and Blackrock Hi Yld, you can compare the effects of market volatilities on Multisector Bond and Blackrock 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 Multisector Bond with a short position of Blackrock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multisector Bond and Blackrock.
Diversification Opportunities for Multisector Bond and Blackrock
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Multisector and Blackrock is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Multisector Bond Sma and Blackrock Hi Yld in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Hi Yld and Multisector Bond 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 Multisector Bond Sma are associated (or correlated) with Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Hi Yld has no effect on the direction of Multisector Bond i.e., Multisector Bond and Blackrock go up and down completely randomly.
Pair Corralation between Multisector Bond and Blackrock
Assuming the 90 days horizon Multisector Bond Sma is expected to generate 1.73 times more return on investment than Blackrock. However, Multisector Bond is 1.73 times more volatile than Blackrock Hi Yld. It trades about 0.1 of its potential returns per unit of risk. Blackrock Hi Yld is currently generating about 0.08 per unit of risk. If you would invest 1,354 in Multisector Bond Sma on November 7, 2024 and sell it today you would earn a total of 8.00 from holding Multisector Bond Sma or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multisector Bond Sma vs. Blackrock Hi Yld
Performance |
| Timeline |
| Multisector Bond Sma |
| Blackrock Hi Yld |
Multisector Bond and Blackrock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multisector Bond and Blackrock
The main advantage of trading using opposite Multisector Bond and Blackrock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multisector Bond position performs unexpectedly, Blackrock 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 will offset losses from the drop in Blackrock's long position.| Multisector Bond vs. Voya Target Retirement | Multisector Bond vs. Wealthbuilder Moderate Balanced | Multisector Bond vs. Great West Moderately Aggressive | Multisector Bond vs. Franklin Lifesmart Retirement |
| Blackrock vs. Gmo Resources | Blackrock vs. Gamco Natural Resources | Blackrock vs. Hennessy Bp Energy | Blackrock vs. Pimco Energy Tactical |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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