Correlation Between Blackrock Muniholdings and Diamond Hill

Can any of the company-specific risk be diversified away by investing in both Blackrock Muniholdings and Diamond Hill 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 Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blackrock Muniholdings Ny and Diamond Hill Investment, you can compare the effects of market volatilities on Blackrock Muniholdings and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniholdings and Diamond Hill.

Diversification Opportunities for Blackrock Muniholdings and Diamond Hill

0.56

Correlation Coefficient

Blackrock Muniholdings  Diamond Hill

Very weak diversification

The 3 months correlation between BlackRock and Diamond is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Ny and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment 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 Ny are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and Diamond Hill go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and Diamond Hill

Considering the 90-day investment horizon Blackrock Muniholdings Ny is expected to generate 0.51 times more return on investment than Diamond Hill. However, Blackrock Muniholdings Ny is 1.95 times less risky than Diamond Hill. It trades about -0.07 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about -0.17 per unit of risk. If you would invest  1,080  in Blackrock Muniholdings Ny on November 28, 2024 and sell it today you would lose (27.00) from holding Blackrock Muniholdings Ny or give up 2.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Blackrock Muniholdings Ny  vs.  Diamond Hill Investment

Blackrock Muniholdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Muniholdings Ny has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical indicators, Blackrock Muniholdings is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Diamond Hill Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamond Hill Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Blackrock Muniholdings and Diamond Hill

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

The idea behind Blackrock Muniholdings Ny and Diamond Hill Investment 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.