Correlation Between Blackrock Muniholdings and Aberdeen Total

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

Diversification Opportunities for Blackrock Muniholdings and Aberdeen Total

0.19

Correlation Coefficient

Blackrock Muniholdings  Aberdeen Total

Average diversification

The 3 months correlation between Blackrock and Aberdeen is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Quality and Aberdeen Total Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Total Dynamic 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 Aberdeen Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Total Dynamic has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and Aberdeen Total go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and Aberdeen Total

Considering the 90-day investment horizon Blackrock Muniholdings Quality is expected to under-perform the Aberdeen Total. In addition to that, Blackrock Muniholdings is 1.13 times more volatile than Aberdeen Total Dynamic. It trades about -0.28 of its total potential returns per unit of risk. Aberdeen Total Dynamic is currently generating about -0.17 per unit of volatility. If you would invest  871.00  in Aberdeen Total Dynamic on September 23, 2024 and sell it today you would lose (23.00) from holding Aberdeen Total Dynamic or give up 2.64% of portfolio value over 90 days.

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

Blackrock Muniholdings Quality  vs.  Aberdeen Total Dynamic

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Aberdeen Total Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Blackrock Muniholdings and Aberdeen Total

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

The idea behind Blackrock Muniholdings Quality and Aberdeen Total Dynamic 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.