Correlation Between High-yield Fund and Blackrock High
Can any of the company-specific risk be diversified away by investing in both High-yield Fund and Blackrock High 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 High-yield Fund and Blackrock High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between High Yield Fund R5 and Blackrock High Yield, you can compare the effects of market volatilities on High-yield Fund and Blackrock High 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 High-yield Fund with a short position of Blackrock High. Check out your portfolio center. Please also check ongoing floating volatility patterns of High-yield Fund and Blackrock High.
Diversification Opportunities for High-yield Fund and Blackrock High
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between High-yield and Blackrock is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding High Yield Fund R5 and Blackrock High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock High Yield and High-yield Fund 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 High Yield Fund R5 are associated (or correlated) with Blackrock High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock High Yield has no effect on the direction of High-yield Fund i.e., High-yield Fund and Blackrock High go up and down completely randomly.
Pair Corralation between High-yield Fund and Blackrock High
Assuming the 90 days horizon High Yield Fund R5 is expected to under-perform the Blackrock High. In addition to that, High-yield Fund is 1.01 times more volatile than Blackrock High Yield. It trades about -0.13 of its total potential returns per unit of risk. Blackrock High Yield is currently generating about -0.12 per unit of volatility. If you would invest 702.00 in Blackrock High Yield on January 25, 2024 and sell it today you would lose (5.00) from holding Blackrock High Yield or give up 0.71% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
High Yield Fund R5 vs. Blackrock High Yield
Performance |
Timeline |
High Yield Fund |
Blackrock High Yield |
High-yield Fund and Blackrock High Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with High-yield Fund and Blackrock High
The main advantage of trading using opposite High-yield Fund and Blackrock High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High-yield Fund position performs unexpectedly, Blackrock High 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 High will offset losses from the drop in Blackrock High's long position.High-yield Fund vs. Mid Cap Value | High-yield Fund vs. Equity Growth Fund | High-yield Fund vs. Income Growth Fund | High-yield Fund vs. Diversified Bond Fund |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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