Correlation Between Clearbridge Energy and Blackrock Muniyield

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

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

Diversification Opportunities for Clearbridge Energy and Blackrock Muniyield

-0.19

Correlation Coefficient

Clearbridge Energy  Blackrock Muniyield

Good diversification

The 3 months correlation between Clearbridge and Blackrock is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Clearbridge Energy Mlp and Blackrock Muniyield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and Clearbridge Energy 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 Clearbridge Energy Mlp 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 Clearbridge Energy i.e., Clearbridge Energy and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Clearbridge Energy and Blackrock Muniyield

Considering the 90-day investment horizon Clearbridge Energy Mlp is expected to under-perform the Blackrock Muniyield. In addition to that, Clearbridge Energy is 2.25 times more volatile than Blackrock Muniyield. It trades about -0.15 of its total potential returns per unit of risk. Blackrock Muniyield is currently generating about -0.18 per unit of volatility. If you would invest  1,114  in Blackrock Muniyield on September 19, 2024 and sell it today you would lose (30.00) from holding Blackrock Muniyield or give up 2.69% of portfolio value over 90 days.

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

Clearbridge Energy Mlp  vs.  Blackrock Muniyield

Clearbridge Energy Mlp

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady primary indicators, Clearbridge Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Clearbridge Energy and Blackrock Muniyield

The main advantage of trading using opposite Clearbridge Energy and Blackrock Muniyield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearbridge Energy 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 Clearbridge Energy Mlp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.