Correlation Between Blackrock Muniholdings and BlackRock Income

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

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

Diversification Opportunities for Blackrock Muniholdings and BlackRock Income

0.58

Correlation Coefficient

Blackrock Muniholdings  BlackRock Income

Very weak diversification

The 3 months correlation between Blackrock and BlackRock is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Closed and BlackRock Income Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Income Closed and Blackrock Muniholdings 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 Muniholdings Closed are associated (or correlated) with BlackRock Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Income Closed has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and BlackRock Income go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and BlackRock Income

Considering the 90-day investment horizon Blackrock Muniholdings is expected to generate 2.24 times less return on investment than BlackRock Income. In addition to that, Blackrock Muniholdings is 1.14 times more volatile than BlackRock Income Closed. It trades about 0.06 of its total potential returns per unit of risk. BlackRock Income Closed is currently generating about 0.14 per unit of volatility. If you would invest  1,124  in BlackRock Income Closed on December 30, 2024 and sell it today you would earn a total of  53.00  from holding BlackRock Income Closed or generate 4.72% return on investment over 90 days.

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

Blackrock Muniholdings Closed  vs.  BlackRock Income Closed

Blackrock Muniholdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniholdings Closed are ranked lower than 4 (%) 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

BlackRock Income Closed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Income Closed are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Blackrock Muniholdings and BlackRock Income

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

The idea behind Blackrock Muniholdings Closed and BlackRock Income 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.