Correlation Between Avantax and Blackrock Muniyield

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

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

Diversification Opportunities for Avantax and Blackrock Muniyield

0.22

Correlation Coefficient

Avantax  Blackrock Muniyield

Modest diversification

The 3 months correlation between Avantax and Blackrock is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Avantax and Blackrock Muniyield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and Avantax 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 Avantax 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 Avantax i.e., Avantax and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Avantax and Blackrock Muniyield

If you would invest  1,014  in Blackrock Muniyield on September 14, 2024 and sell it today you would earn a total of  102.00  from holding Blackrock Muniyield or generate 10.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.4%
Values	Daily Returns

Avantax  vs.  Blackrock Muniyield

Avantax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantax has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Avantax 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

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 Avantax and Blackrock Muniyield

The main advantage of trading using opposite Avantax and Blackrock Muniyield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantax 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 Avantax 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.