Correlation Between Blackrock Muni and BlackRock Core

Can any of the company-specific risk be diversified away by investing in both Blackrock Muni and BlackRock Core 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 Muni and BlackRock Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blackrock Muni Intermediate and BlackRock Core Bond, you can compare the effects of market volatilities on Blackrock Muni and BlackRock Core 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 Muni with a short position of BlackRock Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muni and BlackRock Core.

Diversification Opportunities for Blackrock Muni and BlackRock Core

-0.75

Correlation Coefficient

Blackrock Muni  BlackRock Core

Pay attention - limited upside

The 3 months correlation between Blackrock and BlackRock is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muni Intermediate and BlackRock Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Core Bond and Blackrock Muni 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 Muni Intermediate are associated (or correlated) with BlackRock Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Core Bond has no effect on the direction of Blackrock Muni i.e., Blackrock Muni and BlackRock Core go up and down completely randomly.

Pair Corralation between Blackrock Muni and BlackRock Core

Considering the 90-day investment horizon Blackrock Muni is expected to generate 8.38 times less return on investment than BlackRock Core. In addition to that, Blackrock Muni is 1.06 times more volatile than BlackRock Core Bond. It trades about 0.02 of its total potential returns per unit of risk. BlackRock Core Bond is currently generating about 0.14 per unit of volatility. If you would invest  1,017  in BlackRock Core Bond on December 30, 2024 and sell it today you would earn a total of  60.00  from holding BlackRock Core Bond or generate 5.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	59.68%
Values	Daily Returns

Blackrock Muni Intermediate  vs.  BlackRock Core Bond

Blackrock Muni Inter

Risk-Adjusted Performance

Weak

Over the last 90 days Blackrock Muni Intermediate has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, Blackrock Muni is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

BlackRock Core Bond

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Core Bond are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, BlackRock Core is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Blackrock Muni and BlackRock Core

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

The idea behind Blackrock Muni Intermediate and BlackRock Core Bond 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.