Correlation Between BlackRock Income and DWS Municipal

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Can any of the company-specific risk be diversified away by investing in both BlackRock Income and DWS Municipal 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 Income and DWS Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock Income Closed and DWS Municipal Income, you can compare the effects of market volatilities on BlackRock Income and DWS Municipal 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 Income with a short position of DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Income and DWS Municipal.

Diversification Opportunities for BlackRock Income and DWS Municipal

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between BlackRock and DWS is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Income Closed and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income and BlackRock Income 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 Income Closed are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of BlackRock Income i.e., BlackRock Income and DWS Municipal go up and down completely randomly.

Pair Corralation between BlackRock Income and DWS Municipal

Considering the 90-day investment horizon BlackRock Income Closed is expected to under-perform the DWS Municipal. But the etf apears to be less risky and, when comparing its historical volatility, BlackRock Income Closed is 1.16 times less risky than DWS Municipal. The etf trades about -0.05 of its potential returns per unit of risk. The DWS Municipal Income is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  961.00  in DWS Municipal Income on August 31, 2024 and sell it today you would earn a total of  45.00  from holding DWS Municipal Income or generate 4.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

BlackRock Income Closed  vs.  DWS Municipal Income

 Performance 
       Timeline  
BlackRock Income Closed 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BlackRock Income Closed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, BlackRock Income is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
DWS Municipal Income 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in DWS Municipal Income are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DWS Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BlackRock Income and DWS Municipal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BlackRock Income and DWS Municipal

The main advantage of trading using opposite BlackRock Income and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Income position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.
The idea behind BlackRock Income Closed and DWS Municipal Income 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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