Correlation Between BlackRock Strategic and GMO Opportunistic

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

By analyzing existing cross correlation between BlackRock Strategic Income and GMO Opportunistic Income, you can compare the effects of market volatilities on BlackRock Strategic and GMO Opportunistic 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 Strategic with a short position of GMO Opportunistic. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Strategic and GMO Opportunistic.

Diversification Opportunities for BlackRock Strategic and GMO Opportunistic

0.71

Correlation Coefficient

BlackRock Strategic GMO Opportunistic

Poor diversification

The 3 months correlation between BlackRock and GAAAX is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Strategic Income and GMO Opportunistic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMO Opportunistic Income and BlackRock Strategic 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 Strategic Income are associated (or correlated) with GMO Opportunistic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMO Opportunistic Income has no effect on the direction of BlackRock Strategic i.e., BlackRock Strategic and GMO Opportunistic go up and down completely randomly.

Pair Corralation between BlackRock Strategic and GMO Opportunistic

Assuming the 90 days horizon BlackRock Strategic Income is expected to under-perform the GMO Opportunistic. But the mutual fund apears to be less risky and, when comparing its historical volatility, BlackRock Strategic Income is 1.5 times less risky than GMO Opportunistic. The mutual fund trades about -0.04 of its potential returns per unit of risk. The GMO Opportunistic Income is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,404  in GMO Opportunistic Income on December 23, 2022 and sell it today you would earn a total of  14.00  from holding GMO Opportunistic Income or generate 0.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.55%
Values	Daily Returns

BlackRock Strategic Income  vs.  GMO Opportunistic Income

BlackRock Strategic

BlackRock Performance

6 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Strategic Income are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, BlackRock Strategic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

GMO Opportunistic Income

GAAAX Performance

14 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in GMO Opportunistic Income are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, GMO Opportunistic is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock Strategic and GMO Opportunistic

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

	BlackRock Strategic vs. BlackRock Strategic
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	BlackRock Strategic vs. JPMORGAN STRATEGIC INCOME
	BlackRock Strategic vs. JPMORGAN STRATEGIC INCOME

The idea behind BlackRock Strategic Income and GMO Opportunistic Income 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.

	GMO Opportunistic vs. BlackRock Strategic Income
	GMO Opportunistic vs. BlackRock Strategic
	GMO Opportunistic vs. TEMPLETON GLOBAL BOND
	GMO Opportunistic vs. JPMORGAN STRATEGIC INCOME

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.