Correlation Between Blackrock Muniholdings and Invesco BulletShares

Can any of the company-specific risk be diversified away by investing in both Blackrock Muniholdings and Invesco BulletShares 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 Invesco BulletShares 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 Invesco BulletShares 2032, you can compare the effects of market volatilities on Blackrock Muniholdings and Invesco BulletShares 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 Invesco BulletShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniholdings and Invesco BulletShares.

Diversification Opportunities for Blackrock Muniholdings and Invesco BulletShares

0.64

Correlation Coefficient

Blackrock Muniholdings  Invesco BulletShares

Poor diversification

The 3 months correlation between Blackrock and Invesco is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Closed and Invesco BulletShares 2032 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco BulletShares 2032 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 Invesco BulletShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco BulletShares 2032 has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and Invesco BulletShares go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and Invesco BulletShares

Considering the 90-day investment horizon Blackrock Muniholdings Closed is expected to under-perform the Invesco BulletShares. In addition to that, Blackrock Muniholdings is 2.18 times more volatile than Invesco BulletShares 2032. It trades about -0.33 of its total potential returns per unit of risk. Invesco BulletShares 2032 is currently generating about -0.15 per unit of volatility. If you would invest  2,543  in Invesco BulletShares 2032 on October 7, 2024 and sell it today you would lose (27.00) from holding Invesco BulletShares 2032 or give up 1.06% of portfolio value over 90 days.

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

Blackrock Muniholdings Closed  vs.  Invesco BulletShares 2032

Blackrock Muniholdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniholdings Closed has generated negative risk-adjusted returns adding no value to fund investors. 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.

Invesco BulletShares 2032

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco BulletShares 2032 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward-looking indicators, Invesco BulletShares is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Blackrock Muniholdings and Invesco BulletShares

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

The idea behind Blackrock Muniholdings Closed and Invesco BulletShares 2032 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.