Correlation Between BlackRock Intermediate and IShares Aaa

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

By analyzing existing cross correlation between BlackRock Intermediate Muni and iShares Aaa , you can compare the effects of market volatilities on BlackRock Intermediate and IShares Aaa 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 Intermediate with a short position of IShares Aaa. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Intermediate and IShares Aaa.

Diversification Opportunities for BlackRock Intermediate and IShares Aaa

0.59

Correlation Coefficient

BlackRock Intermediate  IShares Aaa

Very weak diversification

The 3 months correlation between BlackRock and IShares is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Intermediate Muni and iShares Aaa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Aaa and BlackRock Intermediate 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 Intermediate Muni are associated (or correlated) with IShares Aaa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Aaa has no effect on the direction of BlackRock Intermediate i.e., BlackRock Intermediate and IShares Aaa go up and down completely randomly.

Pair Corralation between BlackRock Intermediate and IShares Aaa

Given the investment horizon of 90 days BlackRock Intermediate Muni is expected to generate 1.04 times more return on investment than IShares Aaa. However, BlackRock Intermediate is 1.04 times more volatile than iShares Aaa . It trades about -0.21 of its potential returns per unit of risk. iShares Aaa is currently generating about -0.41 per unit of risk. If you would invest  2,394  in BlackRock Intermediate Muni on October 11, 2024 and sell it today you would lose (36.00) from holding BlackRock Intermediate Muni or give up 1.5% of portfolio value over 90 days.

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

BlackRock Intermediate Muni  vs.  iShares Aaa

BlackRock Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares Aaa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Aaa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, IShares Aaa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BlackRock Intermediate and IShares Aaa

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

The idea behind BlackRock Intermediate Muni and iShares Aaa 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.