Correlation Between Blackrock Muniyield and Gabelli Equity

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

By analyzing existing cross correlation between Blackrock Muniyield Quality and The Gabelli Equity, you can compare the effects of market volatilities on Blackrock Muniyield and Gabelli Equity 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 Muniyield with a short position of Gabelli Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniyield and Gabelli Equity.

Diversification Opportunities for Blackrock Muniyield and Gabelli Equity

0.89

Correlation Coefficient

Blackrock Muniyield  Gabelli Equity

Very poor diversification

The 3 months correlation between Blackrock and Gabelli is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield Quality and The Gabelli Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Equity and Blackrock Muniyield 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 Muniyield Quality are associated (or correlated) with Gabelli Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Equity has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and Gabelli Equity go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and Gabelli Equity

Considering the 90-day investment horizon Blackrock Muniyield Quality is expected to under-perform the Gabelli Equity. But the fund apears to be less risky and, when comparing its historical volatility, Blackrock Muniyield Quality is 1.18 times less risky than Gabelli Equity. The fund trades about -0.46 of its potential returns per unit of risk. The The Gabelli Equity is currently generating about -0.28 of returns per unit of risk over similar time horizon. If you would invest  2,273  in The Gabelli Equity on October 5, 2024 and sell it today you would lose (134.00) from holding The Gabelli Equity or give up 5.9% of portfolio value over 90 days.

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

Blackrock Muniyield Quality  vs.  The Gabelli Equity

Blackrock Muniyield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniyield Quality has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest fragile performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Gabelli Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Preferred Stock's fundamental drivers remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Blackrock Muniyield and Gabelli Equity

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

The idea behind Blackrock Muniyield Quality and The Gabelli Equity 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.