Correlation Between Blackrock Muniholdings and Xtrackers Low

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

Diversification Opportunities for Blackrock Muniholdings and Xtrackers Low

0.66

Correlation Coefficient

Blackrock Muniholdings  Xtrackers Low

Poor diversification

The 3 months correlation between Blackrock and Xtrackers is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Closed and Xtrackers Low Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Low Beta 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 Xtrackers Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Low Beta has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and Xtrackers Low go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and Xtrackers Low

Considering the 90-day investment horizon Blackrock Muniholdings Closed is expected to under-perform the Xtrackers Low. In addition to that, Blackrock Muniholdings is 3.87 times more volatile than Xtrackers Low Beta. It trades about 0.0 of its total potential returns per unit of risk. Xtrackers Low Beta is currently generating about 0.04 per unit of volatility. If you would invest  4,655  in Xtrackers Low Beta on September 13, 2024 and sell it today you would earn a total of  21.00  from holding Xtrackers Low Beta or generate 0.45% return on investment over 90 days.

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

Blackrock Muniholdings Closed  vs.  Xtrackers Low Beta

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.

Xtrackers Low Beta

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Low Beta are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Xtrackers Low is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Blackrock Muniholdings and Xtrackers Low

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

The idea behind Blackrock Muniholdings Closed and Xtrackers Low Beta 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.