Correlation Between Income Growth and Blackrock Muniyield

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

By analyzing existing cross correlation between Income Growth Fund and Blackrock Muniyield Quality, you can compare the effects of market volatilities on Income Growth and Blackrock Muniyield 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 Income Growth with a short position of Blackrock Muniyield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Income Growth and Blackrock Muniyield.

Diversification Opportunities for Income Growth and Blackrock Muniyield

0.22

Correlation Coefficient

Income Growth  Blackrock Muniyield

Modest diversification

The 3 months correlation between Income and Blackrock is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Income Growth Fund and Blackrock Muniyield Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and Income Growth 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 Income Growth Fund are associated (or correlated) with Blackrock Muniyield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniyield has no effect on the direction of Income Growth i.e., Income Growth and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Income Growth and Blackrock Muniyield

Assuming the 90 days horizon Income Growth Fund is expected to under-perform the Blackrock Muniyield. In addition to that, Income Growth is 1.37 times more volatile than Blackrock Muniyield Quality. It trades about -0.05 of its total potential returns per unit of risk. Blackrock Muniyield Quality is currently generating about 0.12 per unit of volatility. If you would invest  1,127  in Blackrock Muniyield Quality on December 29, 2024 and sell it today you would earn a total of  48.00  from holding Blackrock Muniyield Quality or generate 4.26% return on investment over 90 days.

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

Income Growth Fund  vs.  Blackrock Muniyield Quality

Income Growth

Risk-Adjusted Performance

Very Weak

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

Blackrock Muniyield

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniyield Quality 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 Muniyield is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Income Growth and Blackrock Muniyield

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

The idea behind Income Growth Fund and Blackrock Muniyield Quality 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..