Correlation Between Blackrock Muniholdings and Gabelli Utility

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

Diversification Opportunities for Blackrock Muniholdings and Gabelli Utility

BlackrockGabelliDiversified AwayBlackrockGabelliDiversified Away100%
0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Blackrock and Gabelli is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Quality and Gabelli Utility Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utility Closed 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 Gabelli Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utility Closed has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and Gabelli Utility go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and Gabelli Utility

Considering the 90-day investment horizon Blackrock Muniholdings is expected to generate 11.02 times less return on investment than Gabelli Utility. But when comparing it to its historical volatility, Blackrock Muniholdings Quality is 1.85 times less risky than Gabelli Utility. It trades about 0.01 of its potential returns per unit of risk. Gabelli Utility Closed is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  523.00  in Gabelli Utility Closed on September 14, 2024 and sell it today you would earn a total of  15.00  from holding Gabelli Utility Closed or generate 2.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Blackrock Muniholdings Quality  vs.  Gabelli Utility Closed

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -6-4-202
JavaScript chart by amCharts 3.21.15MUE GUT
       Timeline  
Blackrock Muniholdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec10.210.310.410.510.610.710.810.9
Gabelli Utility Closed 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Gabelli Utility Closed are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Gabelli Utility is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec4.955.15.25.35.4

Blackrock Muniholdings and Gabelli Utility Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.81-1.35-0.89-0.430.00.420.881.341.82.26 0.20.40.60.81.01.2
JavaScript chart by amCharts 3.21.15MUE GUT
       Returns  

Pair Trading with Blackrock Muniholdings and Gabelli Utility

The main advantage of trading using opposite Blackrock Muniholdings and Gabelli Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniholdings position performs unexpectedly, Gabelli Utility 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 Utility will offset losses from the drop in Gabelli Utility's long position.
The idea behind Blackrock Muniholdings Quality and Gabelli Utility Closed 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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