Correlation Between Blackrock Lifepath and One Choice

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

By analyzing existing cross correlation between Blackrock Lifepath Idx and One Choice In, you can compare the effects of market volatilities on Blackrock Lifepath and One Choice 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 Lifepath with a short position of One Choice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Lifepath and One Choice.

Diversification Opportunities for Blackrock Lifepath and One Choice

0.85

Correlation Coefficient

Blackrock Lifepath  One Choice

Very poor diversification

The 3 months correlation between Blackrock and One is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Lifepath Idx and One Choice In in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Choice In and Blackrock Lifepath 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 Lifepath Idx are associated (or correlated) with One Choice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Choice In has no effect on the direction of Blackrock Lifepath i.e., Blackrock Lifepath and One Choice go up and down completely randomly.

Pair Corralation between Blackrock Lifepath and One Choice

Assuming the 90 days horizon Blackrock Lifepath Idx is expected to under-perform the One Choice. But the mutual fund apears to be less risky and, when comparing its historical volatility, Blackrock Lifepath Idx is 1.05 times less risky than One Choice. The mutual fund trades about -0.35 of its potential returns per unit of risk. The One Choice In is currently generating about -0.32 of returns per unit of risk over similar time horizon. If you would invest  1,225  in One Choice In on January 20, 2024 and sell it today you would lose (32.00) from holding One Choice In or give up 2.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Blackrock Lifepath Idx  vs.  One Choice In

Blackrock Lifepath Idx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Lifepath Idx has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Blackrock Lifepath is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

One Choice In

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days One Choice In has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, One Choice 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 Lifepath and One Choice

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

The idea behind Blackrock Lifepath Idx and One Choice In 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.