Correlation Between Blackrock Enhanced and Transamerica Asset

Can any of the company-specific risk be diversified away by investing in both Blackrock Enhanced and Transamerica Asset 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 Enhanced and Transamerica Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blackrock Enhanced Capital and Transamerica Asset Allocation, you can compare the effects of market volatilities on Blackrock Enhanced and Transamerica Asset 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 Enhanced with a short position of Transamerica Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Enhanced and Transamerica Asset.

Diversification Opportunities for Blackrock Enhanced and Transamerica Asset

0.45

Correlation Coefficient

Blackrock Enhanced  Transamerica Asset

Very weak diversification

The 3 months correlation between Blackrock and Transamerica is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Enhanced Capital and Transamerica Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Asset and Blackrock Enhanced 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 Enhanced Capital are associated (or correlated) with Transamerica Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Asset has no effect on the direction of Blackrock Enhanced i.e., Blackrock Enhanced and Transamerica Asset go up and down completely randomly.

Pair Corralation between Blackrock Enhanced and Transamerica Asset

Considering the 90-day investment horizon Blackrock Enhanced is expected to generate 1.16 times less return on investment than Transamerica Asset. In addition to that, Blackrock Enhanced is 1.43 times more volatile than Transamerica Asset Allocation. It trades about 0.05 of its total potential returns per unit of risk. Transamerica Asset Allocation is currently generating about 0.08 per unit of volatility. If you would invest  1,032  in Transamerica Asset Allocation on June 23, 2024 and sell it today you would earn a total of  331.00  from holding Transamerica Asset Allocation or generate 32.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.81%
Values	Daily Returns

Blackrock Enhanced Capital  vs.  Transamerica Asset Allocation

Blackrock Enhanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Enhanced Capital has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong forward indicators, Blackrock Enhanced is not utilizing all of its potentials. The new stock price confusion, may contribute to short-horizon losses for the traders.

Transamerica Asset

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Asset Allocation are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Transamerica Asset 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 Enhanced and Transamerica Asset

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

The idea behind Blackrock Enhanced Capital and Transamerica Asset Allocation 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.