Correlation Between Blackrock Muniholdings and FAM

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

Diversification Opportunities for Blackrock Muniholdings and FAM

0.4

Correlation Coefficient

Blackrock Muniholdings  FAM

Very weak diversification

The 3 months correlation between Blackrock and FAM is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Ny and FAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAM 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 FAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAM has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and FAM go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and FAM

If you would invest  1,057  in Blackrock Muniholdings Ny on August 31, 2024 and sell it today you would earn a total of  39.00  from holding Blackrock Muniholdings Ny or generate 3.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	4.35%
Values	Daily Returns

Blackrock Muniholdings Ny  vs.  FAM

Blackrock Muniholdings

Risk-Adjusted Performance

0 of 100

Modest

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

FAM

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days FAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, FAM displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock Muniholdings and FAM

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

The idea behind Blackrock Muniholdings Ny and FAM 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.