Correlation Between Blackrock Muniholdings and Gabelli Equity

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

Diversification Opportunities for Blackrock Muniholdings and Gabelli Equity

0.12

Correlation Coefficient

Blackrock Muniholdings  Gabelli Equity

Average diversification

The 3 months correlation between Blackrock and Gabelli is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Closed and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity 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 Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and Gabelli Equity go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and Gabelli Equity

Considering the 90-day investment horizon Blackrock Muniholdings Closed is expected to generate 1.28 times more return on investment than Gabelli Equity. However, Blackrock Muniholdings is 1.28 times more volatile than The Gabelli Equity. It trades about 0.06 of its potential returns per unit of risk. The Gabelli Equity is currently generating about 0.03 per unit of risk. If you would invest  1,148  in Blackrock Muniholdings Closed on December 30, 2024 and sell it today you would earn a total of  23.00  from holding Blackrock Muniholdings Closed or generate 2.0% return on investment over 90 days.

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

Blackrock Muniholdings Closed  vs.  The Gabelli Equity

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.

Gabelli Equity

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Gabelli Equity are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Gabelli Equity is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Blackrock Muniholdings and Gabelli Equity

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

The idea behind Blackrock Muniholdings Closed and The Gabelli Equity 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.