Correlation Between Blackrock Muniholdings and Ocean Park

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

Diversification Opportunities for Blackrock Muniholdings and Ocean Park

0.63

Correlation Coefficient

Blackrock Muniholdings  Ocean Park

Poor diversification

The 3 months correlation between Blackrock and Ocean is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Ny and Ocean Park High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Park 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 Ny are associated (or correlated) with Ocean Park. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Park High has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and Ocean Park go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and Ocean Park

Considering the 90-day investment horizon Blackrock Muniholdings Ny is expected to generate 2.88 times more return on investment than Ocean Park. However, Blackrock Muniholdings is 2.88 times more volatile than Ocean Park High. It trades about 0.05 of its potential returns per unit of risk. Ocean Park High is currently generating about 0.13 per unit of risk. If you would invest  937.00  in Blackrock Muniholdings Ny on September 19, 2024 and sell it today you would earn a total of  118.00  from holding Blackrock Muniholdings Ny or generate 12.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	28.57%
Values	Daily Returns

Blackrock Muniholdings Ny  vs.  Ocean Park High

Blackrock Muniholdings

Risk-Adjusted Performance

0 of 100

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 latest stock price disarray, may contribute to short-term losses for the investors.

Ocean Park High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Park High has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking signals, Ocean Park is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Blackrock Muniholdings and Ocean Park

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

The idea behind Blackrock Muniholdings Ny and Ocean Park 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.