Correlation Between Flow Capital and Blackrock Munivest

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

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

Diversification Opportunities for Flow Capital and Blackrock Munivest

-0.28

Correlation Coefficient

Flow Capital  Blackrock Munivest

Very good diversification

The 3 months correlation between Flow and Blackrock is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Flow Capital Corp and Blackrock Munivest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Munivest and Flow Capital 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 Flow Capital Corp are associated (or correlated) with Blackrock Munivest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Munivest has no effect on the direction of Flow Capital i.e., Flow Capital and Blackrock Munivest go up and down completely randomly.

Pair Corralation between Flow Capital and Blackrock Munivest

Assuming the 90 days horizon Flow Capital Corp is expected to under-perform the Blackrock Munivest. But the pink sheet apears to be less risky and, when comparing its historical volatility, Flow Capital Corp is 1.86 times less risky than Blackrock Munivest. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Blackrock Munivest is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Blackrock Munivest on September 17, 2024 and sell it today you would lose (9.00) from holding Blackrock Munivest or give up 0.82% of portfolio value over 90 days.

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

Flow Capital Corp  vs.  Blackrock Munivest

Flow Capital Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flow Capital Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Flow Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Blackrock Munivest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Munivest has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Blackrock Munivest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Flow Capital and Blackrock Munivest

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

The idea behind Flow Capital Corp and Blackrock Munivest 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.