Correlation Between Elysee Development and Blackrock Muniyield

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

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

Diversification Opportunities for Elysee Development and Blackrock Muniyield

0.27

Correlation Coefficient

Elysee Development  Blackrock Muniyield

Modest diversification

The 3 months correlation between Elysee and Blackrock is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Elysee Development Corp and Blackrock Muniyield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and Elysee Development 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 Elysee Development Corp 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 Elysee Development i.e., Elysee Development and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Elysee Development and Blackrock Muniyield

Assuming the 90 days horizon Elysee Development Corp is expected to generate 9.12 times more return on investment than Blackrock Muniyield. However, Elysee Development is 9.12 times more volatile than Blackrock Muniyield. It trades about -0.01 of its potential returns per unit of risk. Blackrock Muniyield is currently generating about -0.07 per unit of risk. If you would invest  24.00  in Elysee Development Corp on September 14, 2024 and sell it today you would lose (3.00) from holding Elysee Development Corp or give up 12.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Elysee Development Corp  vs.  Blackrock Muniyield

Elysee Development Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Blackrock Muniyield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniyield has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Blackrock Muniyield is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Elysee Development and Blackrock Muniyield

The main advantage of trading using opposite Elysee Development and Blackrock Muniyield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elysee Development 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 Elysee Development Corp and Blackrock Muniyield 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.