Correlation Between Blackrock Municipal and Alliancebernstein

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

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

Diversification Opportunities for Blackrock Municipal and Alliancebernstein

0.9

Correlation Coefficient

Blackrock Municipal  Alliancebernstein

Almost no diversification

The 3 months correlation between Blackrock and Alliancebernstein is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Municipal Target and Alliancebernstein National Mun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein and Blackrock Municipal 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 Municipal Target are associated (or correlated) with Alliancebernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliancebernstein has no effect on the direction of Blackrock Municipal i.e., Blackrock Municipal and Alliancebernstein go up and down completely randomly.

Pair Corralation between Blackrock Municipal and Alliancebernstein

Considering the 90-day investment horizon Blackrock Municipal Target is expected to under-perform the Alliancebernstein. But the stock apears to be less risky and, when comparing its historical volatility, Blackrock Municipal Target is 2.1 times less risky than Alliancebernstein. The stock trades about -0.14 of its potential returns per unit of risk. The Alliancebernstein National Municipal is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,153  in Alliancebernstein National Municipal on September 15, 2024 and sell it today you would lose (23.00) from holding Alliancebernstein National Municipal or give up 1.99% of portfolio value over 90 days.

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

Blackrock Municipal Target  vs.  Alliancebernstein National Mun

Blackrock Municipal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Municipal Target has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Blackrock Municipal is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Alliancebernstein

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alliancebernstein National Municipal has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong technical and fundamental indicators, Alliancebernstein is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Municipal and Alliancebernstein

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

The idea behind Blackrock Municipal Target and Alliancebernstein National Municipal 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 Transaction History module to view history of all your transactions and understand their impact on performance.