Correlation Between Blackrock Muniholdings and Templeton Dragon

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

Diversification Opportunities for Blackrock Muniholdings and Templeton Dragon

-0.1

Correlation Coefficient

Blackrock Muniholdings  Templeton Dragon

Good diversification

The 3 months correlation between Blackrock and Templeton is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Quality and Templeton Dragon Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Dragon 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 Templeton Dragon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Dragon Closed has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and Templeton Dragon go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and Templeton Dragon

Considering the 90-day investment horizon Blackrock Muniholdings Quality is expected to under-perform the Templeton Dragon. But the fund apears to be less risky and, when comparing its historical volatility, Blackrock Muniholdings Quality is 2.3 times less risky than Templeton Dragon. The fund trades about -0.33 of its potential returns per unit of risk. The Templeton Dragon Closed is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  831.00  in Templeton Dragon Closed on September 27, 2024 and sell it today you would earn a total of  46.00  from holding Templeton Dragon Closed or generate 5.54% return on investment over 90 days.

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

Blackrock Muniholdings Quality  vs.  Templeton Dragon Closed

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.

Templeton Dragon Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Templeton Dragon Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable fundamental indicators, Templeton Dragon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Blackrock Muniholdings and Templeton Dragon

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

The idea behind Blackrock Muniholdings Quality and Templeton Dragon 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.