Correlation Between Catalyst/millburn and Blackrock Tactical

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

By analyzing existing cross correlation between Catalystmillburn Hedge Strategy and Blackrock Tactical Opportunities, you can compare the effects of market volatilities on Catalyst/millburn and Blackrock Tactical 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 Catalyst/millburn with a short position of Blackrock Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catalyst/millburn and Blackrock Tactical.

Diversification Opportunities for Catalyst/millburn and Blackrock Tactical

0.87

Correlation Coefficient

Catalyst/millburn  Blackrock Tactical

Very poor diversification

The 3 months correlation between Catalyst/millburn and Blackrock is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Catalystmillburn Hedge Strateg and Blackrock Tactical Opportuniti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Tactical and Catalyst/millburn 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 Catalystmillburn Hedge Strategy are associated (or correlated) with Blackrock Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Tactical has no effect on the direction of Catalyst/millburn i.e., Catalyst/millburn and Blackrock Tactical go up and down completely randomly.

Pair Corralation between Catalyst/millburn and Blackrock Tactical

Assuming the 90 days horizon Catalystmillburn Hedge Strategy is expected to generate 2.43 times more return on investment than Blackrock Tactical. However, Catalyst/millburn is 2.43 times more volatile than Blackrock Tactical Opportunities. It trades about 0.21 of its potential returns per unit of risk. Blackrock Tactical Opportunities is currently generating about -0.01 per unit of risk. If you would invest  3,683  in Catalystmillburn Hedge Strategy on January 26, 2024 and sell it today you would earn a total of  120.00  from holding Catalystmillburn Hedge Strategy or generate 3.26% return on investment over 90 days.

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

Catalystmillburn Hedge Strateg  vs.  Blackrock Tactical Opportuniti

Catalystmillburn Hedge

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalystmillburn Hedge Strategy are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Catalyst/millburn may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Blackrock Tactical

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Tactical Opportunities are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Catalyst/millburn and Blackrock Tactical

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

The idea behind Catalystmillburn Hedge Strategy and Blackrock Tactical Opportunities 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.