Correlation Between Blackrock Muniholdings and MainStay CBRE

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

Diversification Opportunities for Blackrock Muniholdings and MainStay CBRE

0.06

Correlation Coefficient

Blackrock Muniholdings  MainStay CBRE

Significant diversification

The 3 months correlation between Blackrock and MainStay is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Quality and MainStay CBRE Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MainStay CBRE Global 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 MainStay CBRE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MainStay CBRE Global has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and MainStay CBRE go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and MainStay CBRE

Considering the 90-day investment horizon Blackrock Muniholdings Quality is expected to generate 0.72 times more return on investment than MainStay CBRE. However, Blackrock Muniholdings Quality is 1.38 times less risky than MainStay CBRE. It trades about -0.28 of its potential returns per unit of risk. MainStay CBRE Global is currently generating about -0.39 per unit of risk. If you would invest  1,057  in Blackrock Muniholdings Quality on September 23, 2024 and sell it today you would lose (52.00) from holding Blackrock Muniholdings Quality or give up 4.92% 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.  MainStay CBRE Global

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.

MainStay CBRE Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MainStay CBRE Global has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Blackrock Muniholdings and MainStay CBRE

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

The idea behind Blackrock Muniholdings Quality and MainStay CBRE Global 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.