Correlation Between BlackRock Income and Blackrock Muniholdings

Can any of the company-specific risk be diversified away by investing in both BlackRock Income and Blackrock Muniholdings 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 Blackrock Muniholdings 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 Blackrock Muniholdings Closed, you can compare the effects of market volatilities on BlackRock Income and Blackrock Muniholdings 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 Blackrock Muniholdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Income and Blackrock Muniholdings.

Diversification Opportunities for BlackRock Income and Blackrock Muniholdings

0.83

Correlation Coefficient

BlackRock Income  Blackrock Muniholdings

Very poor diversification

The 3 months correlation between BlackRock and BlackRock is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Income Closed and Blackrock Muniholdings Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings 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 Blackrock Muniholdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniholdings has no effect on the direction of BlackRock Income i.e., BlackRock Income and Blackrock Muniholdings go up and down completely randomly.

Pair Corralation between BlackRock Income and Blackrock Muniholdings

Considering the 90-day investment horizon BlackRock Income Closed is expected to under-perform the Blackrock Muniholdings. But the etf apears to be less risky and, when comparing its historical volatility, BlackRock Income Closed is 1.24 times less risky than Blackrock Muniholdings. The etf trades about 0.0 of its potential returns per unit of risk. The Blackrock Muniholdings Closed is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,223  in Blackrock Muniholdings Closed on September 3, 2024 and sell it today you would earn a total of  36.00  from holding Blackrock Muniholdings Closed or generate 2.94% return on investment over 90 days.

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

BlackRock Income Closed  vs.  Blackrock Muniholdings Closed

BlackRock Income Closed

Risk-Adjusted Performance

0 of 100

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.

Blackrock Muniholdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniholdings Closed are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical indicators, Blackrock Muniholdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BlackRock Income and Blackrock Muniholdings

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

The idea behind BlackRock Income Closed and Blackrock Muniholdings Closed 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.