Correlation Between Monroe Capital and Blackrock Muniholdings

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

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

Diversification Opportunities for Monroe Capital and Blackrock Muniholdings

0.21

Correlation Coefficient

Monroe Capital  Blackrock Muniholdings

Modest diversification

The 3 months correlation between Monroe and Blackrock is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Monroe Capital Corp and Blackrock Muniholdings Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings and Monroe Capital 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 Monroe Capital Corp are associated (or correlated) with Blackrock Muniholdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniholdings has no effect on the direction of Monroe Capital i.e., Monroe Capital and Blackrock Muniholdings go up and down completely randomly.

Pair Corralation between Monroe Capital and Blackrock Muniholdings

Given the investment horizon of 90 days Monroe Capital Corp is expected to generate 1.38 times more return on investment than Blackrock Muniholdings. However, Monroe Capital is 1.38 times more volatile than Blackrock Muniholdings Quality. It trades about 0.04 of its potential returns per unit of risk. Blackrock Muniholdings Quality is currently generating about -0.29 per unit of risk. If you would invest  838.00  in Monroe Capital Corp on October 10, 2024 and sell it today you would earn a total of  7.00  from holding Monroe Capital Corp or generate 0.84% return on investment over 90 days.

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

Monroe Capital Corp  vs.  Blackrock Muniholdings Quality

Monroe Capital Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monroe Capital Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Monroe Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Blackrock Muniholdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniholdings Quality has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Blackrock Muniholdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Monroe Capital and Blackrock Muniholdings

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

The idea behind Monroe Capital Corp and Blackrock Muniholdings Quality 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.