Correlation Between Extended Market and Blackrock Inflation
Can any of the company-specific risk be diversified away by investing in both Extended Market and Blackrock Inflation 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 Extended Market and Blackrock Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Blackrock Inflation Protected, you can compare the effects of market volatilities on Extended Market and Blackrock Inflation 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 Extended Market with a short position of Blackrock Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Blackrock Inflation.
Diversification Opportunities for Extended Market and Blackrock Inflation
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Extended and Blackrock is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Blackrock Inflation Protected in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Inflation and Extended Market 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 Extended Market Index are associated (or correlated) with Blackrock Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Inflation has no effect on the direction of Extended Market i.e., Extended Market and Blackrock Inflation go up and down completely randomly.
Pair Corralation between Extended Market and Blackrock Inflation
Assuming the 90 days horizon Extended Market Index is expected to under-perform the Blackrock Inflation. In addition to that, Extended Market is 9.22 times more volatile than Blackrock Inflation Protected. It trades about -0.33 of its total potential returns per unit of risk. Blackrock Inflation Protected is currently generating about -0.24 per unit of volatility. If you would invest 974.00 in Blackrock Inflation Protected on September 28, 2024 and sell it today you would lose (14.00) from holding Blackrock Inflation Protected or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extended Market Index vs. Blackrock Inflation Protected
Performance |
| Timeline |
| Extended Market Index |
| Blackrock Inflation |
Extended Market and Blackrock Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extended Market and Blackrock Inflation
The main advantage of trading using opposite Extended Market and Blackrock Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market position performs unexpectedly, Blackrock Inflation 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 Inflation will offset losses from the drop in Blackrock Inflation's long position.| Extended Market vs. Elfun Government Money | Extended Market vs. General Money Market | Extended Market vs. Putnam Money Market | Extended Market vs. John Hancock Money |
| Blackrock Inflation vs. Barings Emerging Markets | Blackrock Inflation vs. Locorr Market Trend | Blackrock Inflation vs. Extended Market Index | Blackrock Inflation vs. Ep Emerging Markets |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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