Correlation Between Blackrock Muniholdings and DWS Municipal

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Blackrock Muniholdings and DWS Municipal 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 DWS Municipal 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 DWS Municipal Income, you can compare the effects of market volatilities on Blackrock Muniholdings and DWS Municipal 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 DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniholdings and DWS Municipal.

Diversification Opportunities for Blackrock Muniholdings and DWS Municipal

0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Blackrock and DWS is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Closed and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income 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 DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and DWS Municipal go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and DWS Municipal

Considering the 90-day investment horizon Blackrock Muniholdings Closed is expected to under-perform the DWS Municipal. In addition to that, Blackrock Muniholdings is 1.48 times more volatile than DWS Municipal Income. It trades about -0.06 of its total potential returns per unit of risk. DWS Municipal Income is currently generating about -0.04 per unit of volatility. If you would invest  983.00  in DWS Municipal Income on December 2, 2024 and sell it today you would lose (12.00) from holding DWS Municipal Income or give up 1.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Blackrock Muniholdings Closed  vs.  DWS Municipal Income

 Performance 
       Timeline  
Blackrock Muniholdings 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.
DWS Municipal Income 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days DWS Municipal Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DWS Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Blackrock Muniholdings and DWS Municipal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Blackrock Muniholdings and DWS Municipal

The main advantage of trading using opposite Blackrock Muniholdings and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniholdings position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.
The idea behind Blackrock Muniholdings Closed and DWS Municipal Income 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 Transaction History module to view history of all your transactions and understand their impact on performance.

Other Complementary Tools

Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Efficient Frontier
Plot and analyze your portfolio and positions against risk-return landscape of the market.
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators