Correlation Between Blackrock California and Gurtin California

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

Diversification Opportunities for Blackrock California and Gurtin California

0.95

Correlation Coefficient

Blackrock California  Gurtin California

Almost no diversification

The 3 months correlation between Blackrock and Gurtin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock California Municipal and Gurtin California Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gurtin California Muni 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 Gurtin California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gurtin California Muni has no effect on the direction of Blackrock California i.e., Blackrock California and Gurtin California go up and down completely randomly.

Pair Corralation between Blackrock California and Gurtin California

Assuming the 90 days horizon Blackrock California Municipal is expected to generate 1.42 times more return on investment than Gurtin California. However, Blackrock California is 1.42 times more volatile than Gurtin California Muni. It trades about 0.08 of its potential returns per unit of risk. Gurtin California Muni is currently generating about 0.08 per unit of risk. If you would invest  1,115  in Blackrock California Municipal on October 10, 2024 and sell it today you would earn a total of  85.00  from holding Blackrock California Municipal or generate 7.62% 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.  Gurtin California Muni

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.

Gurtin California Muni

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gurtin California Muni has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Gurtin California 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 Gurtin California

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

The idea behind Blackrock California Municipal and Gurtin California Muni 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.