Correlation Between Blackrock Financial and IShares Global

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

By analyzing existing cross correlation between Blackrock Financial Institutions and iShares Global Financials, you can compare the effects of market volatilities on Blackrock Financial and IShares Global 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 Financial with a short position of IShares Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Financial and IShares Global.

Diversification Opportunities for Blackrock Financial and IShares Global

0.84

Correlation Coefficient

Blackrock Financial  IShares Global

Very poor diversification

The 3 months correlation between Blackrock and IShares is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Financial Institutio and iShares Global Financials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Financials and Blackrock Financial 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 Financial Institutions are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Financials has no effect on the direction of Blackrock Financial i.e., Blackrock Financial and IShares Global go up and down completely randomly.

Pair Corralation between Blackrock Financial and IShares Global

Assuming the 90 days horizon Blackrock Financial is expected to generate 86.33 times less return on investment than IShares Global. But when comparing it to its historical volatility, Blackrock Financial Institutions is 3.17 times less risky than IShares Global. It trades about 0.0 of its potential returns per unit of risk. iShares Global Financials is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,750  in iShares Global Financials on January 26, 2024 and sell it today you would earn a total of  1,706  from holding iShares Global Financials or generate 25.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	63.97%
Values	Daily Returns

Blackrock Financial Institutio  vs.  iShares Global Financials

Blackrock Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Financial Institutions are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

iShares Global Financials

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Financials are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, IShares Global may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Blackrock Financial and IShares Global

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

The idea behind Blackrock Financial Institutions and iShares Global Financials 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.