Correlation Between Blackrock Muni and GAMCO Natural

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

Diversification Opportunities for Blackrock Muni and GAMCO Natural

0.48

Correlation Coefficient

Blackrock Muni  GAMCO Natural

Very weak diversification

The 3 months correlation between Blackrock and GAMCO is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muni Intermediate and GAMCO Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMCO Natural Resources 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 GAMCO Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMCO Natural Resources has no effect on the direction of Blackrock Muni i.e., Blackrock Muni and GAMCO Natural go up and down completely randomly.

Pair Corralation between Blackrock Muni and GAMCO Natural

Considering the 90-day investment horizon Blackrock Muni Intermediate is expected to generate 0.45 times more return on investment than GAMCO Natural. However, Blackrock Muni Intermediate is 2.2 times less risky than GAMCO Natural. It trades about -0.35 of its potential returns per unit of risk. GAMCO Natural Resources is currently generating about -0.38 per unit of risk. If you would invest  1,264  in Blackrock Muni Intermediate on September 30, 2024 and sell it today you would lose (53.00) from holding Blackrock Muni Intermediate or give up 4.19% of portfolio value over 90 days.

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

Blackrock Muni Intermediate  vs.  GAMCO Natural Resources

Blackrock Muni Inter

Risk-Adjusted Performance

0 of 100

Very 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 recent stock price confusion, may contribute to short-horizon losses for the traders.

GAMCO Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMCO Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Blackrock Muni and GAMCO Natural

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

The idea behind Blackrock Muni Intermediate and GAMCO Natural Resources 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.