Correlation Between BlackRock Health and IShares MSCI

Can any of the company-specific risk be diversified away by investing in both BlackRock Health and IShares MSCI 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 Health and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BlackRock Health Sciences and iShares MSCI EAFE, you can compare the effects of market volatilities on BlackRock Health and IShares MSCI 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 Health with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Health and IShares MSCI.

Diversification Opportunities for BlackRock Health and IShares MSCI

-0.18

Correlation Coefficient

BlackRock Health  IShares MSCI

Good diversification

The 3 months correlation between BlackRock and IShares is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Health Sciences and iShares MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI EAFE and BlackRock Health 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 Health Sciences are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI EAFE has no effect on the direction of BlackRock Health i.e., BlackRock Health and IShares MSCI go up and down completely randomly.

Pair Corralation between BlackRock Health and IShares MSCI

Considering the 90-day investment horizon BlackRock Health Sciences is expected to under-perform the IShares MSCI. In addition to that, BlackRock Health is 1.02 times more volatile than iShares MSCI EAFE. It trades about -0.09 of its total potential returns per unit of risk. iShares MSCI EAFE is currently generating about 0.14 per unit of volatility. If you would invest  5,231  in iShares MSCI EAFE on February 23, 2024 and sell it today you would earn a total of  298.00  from holding iShares MSCI EAFE or generate 5.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

BlackRock Health Sciences  vs.  iShares MSCI EAFE

BlackRock Health Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock Health Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, BlackRock Health is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

iShares MSCI EAFE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI EAFE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, IShares MSCI is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with BlackRock Health and IShares MSCI

The main advantage of trading using opposite BlackRock Health and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Health position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.

The idea behind BlackRock Health Sciences and iShares MSCI EAFE 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.