Correlation Between Blackrock California and California Intermediate

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

By analyzing existing cross correlation between Blackrock California Municipal and California Intermediate Term Tax Free, you can compare the effects of market volatilities on Blackrock California and California Intermediate 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 California with a short position of California Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock California and California Intermediate.

Diversification Opportunities for Blackrock California and California Intermediate

0.96

Correlation Coefficient

Blackrock California  California Intermediate

Almost no diversification

The 3 months correlation between Blackrock and California is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock California Municipal and California Intermediate Term T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Intermediate and Blackrock California 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 California Municipal are associated (or correlated) with California Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Intermediate has no effect on the direction of Blackrock California i.e., Blackrock California and California Intermediate go up and down completely randomly.

Pair Corralation between Blackrock California and California Intermediate

Assuming the 90 days horizon Blackrock California Municipal is expected to generate 1.19 times more return on investment than California Intermediate. However, Blackrock California is 1.19 times more volatile than California Intermediate Term Tax Free. It trades about 0.07 of its potential returns per unit of risk. California Intermediate Term Tax Free is currently generating about 0.02 per unit of risk. If you would invest  1,164  in Blackrock California Municipal on October 7, 2024 and sell it today you would earn a total of  36.00  from holding Blackrock California Municipal or generate 3.09% return on investment over 90 days.

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

Blackrock California Municipal  vs.  California Intermediate Term T

Blackrock California

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock California Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Blackrock California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

California Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Intermediate Term Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, California Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock California and California Intermediate

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

The idea behind Blackrock California Municipal and California Intermediate Term Tax Free 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.