Correlation Between Blackrock Muniholdings and IShares Edge

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

Diversification Opportunities for Blackrock Muniholdings and IShares Edge

0.03

Correlation Coefficient

Blackrock Muniholdings  IShares Edge

Significant diversification

The 3 months correlation between Blackrock and IShares is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Closed and iShares Edge High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Edge High 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 IShares Edge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Edge High has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and IShares Edge go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and IShares Edge

Considering the 90-day investment horizon Blackrock Muniholdings is expected to generate 9.5 times less return on investment than IShares Edge. In addition to that, Blackrock Muniholdings is 3.13 times more volatile than iShares Edge High. It trades about 0.01 of its total potential returns per unit of risk. iShares Edge High is currently generating about 0.16 per unit of volatility. If you would invest  4,673  in iShares Edge High on September 12, 2024 and sell it today you would earn a total of  101.00  from holding iShares Edge High or generate 2.16% 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.  iShares Edge High

Blackrock Muniholdings

Risk-Adjusted Performance

0 of 100

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.

iShares Edge High

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Edge High are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, IShares Edge is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Muniholdings and IShares Edge

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

The idea behind Blackrock Muniholdings Closed and iShares Edge High 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.