Correlation Between Blackrock Muni and Diamond Hill

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

Diversification Opportunities for Blackrock Muni and Diamond Hill

0.24

Correlation Coefficient

Blackrock Muni  Diamond Hill

Modest diversification

The 3 months correlation between Blackrock and Diamond is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muni Intermediate and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Blackrock Muni i.e., Blackrock Muni and Diamond Hill go up and down completely randomly.

Pair Corralation between Blackrock Muni and Diamond Hill

Considering the 90-day investment horizon Blackrock Muni Intermediate is expected to generate 0.71 times more return on investment than Diamond Hill. However, Blackrock Muni Intermediate is 1.4 times less risky than Diamond Hill. It trades about 0.15 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about -0.09 per unit of risk. If you would invest  1,246  in Blackrock Muni Intermediate on September 9, 2024 and sell it today you would earn a total of  29.00  from holding Blackrock Muni Intermediate or generate 2.33% return on investment over 90 days.

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

Blackrock Muni Intermediate  vs.  Diamond Hill Investment

Blackrock Muni Inter

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muni Intermediate are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. 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.

Diamond Hill Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Diamond Hill Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward indicators, Diamond Hill may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock Muni and Diamond Hill

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

The idea behind Blackrock Muni Intermediate and Diamond Hill Investment 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.