Correlation Between Blackrock Muniholdings and Sixth Street

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

By analyzing existing cross correlation between Blackrock Muniholdings Ca and Sixth Street Specialty, you can compare the effects of market volatilities on Blackrock Muniholdings and Sixth Street 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 Sixth Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniholdings and Sixth Street.

Diversification Opportunities for Blackrock Muniholdings and Sixth Street

0.27

Correlation Coefficient

Blackrock Muniholdings  Sixth Street

Modest diversification

The 3 months correlation between Blackrock and Sixth is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Ca and Sixth Street Specialty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sixth Street Specialty 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 Ca are associated (or correlated) with Sixth Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sixth Street Specialty has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and Sixth Street go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and Sixth Street

Considering the 90-day investment horizon Blackrock Muniholdings Ca is expected to under-perform the Sixth Street. But the fund apears to be less risky and, when comparing its historical volatility, Blackrock Muniholdings Ca is 1.47 times less risky than Sixth Street. The fund trades about -0.05 of its potential returns per unit of risk. The Sixth Street Specialty is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,082  in Sixth Street Specialty on September 15, 2024 and sell it today you would earn a total of  55.00  from holding Sixth Street Specialty or generate 2.64% return on investment over 90 days.

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

Blackrock Muniholdings Ca  vs.  Sixth Street Specialty

Blackrock Muniholdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniholdings Ca 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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Sixth Street Specialty

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sixth Street Specialty are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong essential indicators, Sixth Street is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Muniholdings and Sixth Street

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

The idea behind Blackrock Muniholdings Ca and Sixth Street Specialty 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.