Correlation Between Blackrock Muniholdings and Ashmore Group

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Can any of the company-specific risk be diversified away by investing in both Blackrock Muniholdings and Ashmore Group 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 Ashmore Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Muniholdings Quality and Ashmore Group Plc, you can compare the effects of market volatilities on Blackrock Muniholdings and Ashmore Group 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 Ashmore Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniholdings and Ashmore Group.

Diversification Opportunities for Blackrock Muniholdings and Ashmore Group

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Blackrock and Ashmore is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Quality and Ashmore Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Group Plc 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 Quality are associated (or correlated) with Ashmore Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Group Plc has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and Ashmore Group go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and Ashmore Group

Considering the 90-day investment horizon Blackrock Muniholdings is expected to generate 1.76 times less return on investment than Ashmore Group. But when comparing it to its historical volatility, Blackrock Muniholdings Quality is 4.21 times less risky than Ashmore Group. It trades about 0.11 of its potential returns per unit of risk. Ashmore Group Plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  222.00  in Ashmore Group Plc on September 12, 2024 and sell it today you would earn a total of  48.00  from holding Ashmore Group Plc or generate 21.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy71.52%
ValuesDaily Returns

Blackrock Muniholdings Quality  vs.  Ashmore Group Plc

 Performance 
       Timeline  
Blackrock Muniholdings 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniholdings Quality are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Blackrock Muniholdings is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
Ashmore Group Plc 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ashmore Group Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ashmore Group reported solid returns over the last few months and may actually be approaching a breakup point.

Blackrock Muniholdings and Ashmore Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Blackrock Muniholdings and Ashmore Group

The main advantage of trading using opposite Blackrock Muniholdings and Ashmore Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniholdings position performs unexpectedly, Ashmore Group 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 Ashmore Group will offset losses from the drop in Ashmore Group's long position.
The idea behind Blackrock Muniholdings Quality and Ashmore Group Plc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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