Correlation Between Blackrock Muni and Gabelli Utility

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

Diversification Opportunities for Blackrock Muni and Gabelli Utility

0.17

Correlation Coefficient

Blackrock Muni  Gabelli Utility

Average diversification

The 3 months correlation between Blackrock and Gabelli is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muni Intermediate and The Gabelli Utility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Utility 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 Gabelli Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Utility has no effect on the direction of Blackrock Muni i.e., Blackrock Muni and Gabelli Utility go up and down completely randomly.

Pair Corralation between Blackrock Muni and Gabelli Utility

Considering the 90-day investment horizon Blackrock Muni is expected to generate 1.01 times less return on investment than Gabelli Utility. But when comparing it to its historical volatility, Blackrock Muni Intermediate is 1.41 times less risky than Gabelli Utility. It trades about 0.04 of its potential returns per unit of risk. The Gabelli Utility is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,183  in The Gabelli Utility on October 5, 2024 and sell it today you would earn a total of  257.00  from holding The Gabelli Utility or generate 11.77% return on investment over 90 days.

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

Blackrock Muni Intermediate  vs.  The Gabelli Utility

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

Gabelli Utility

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Gabelli Utility has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Gabelli Utility is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blackrock Muni and Gabelli Utility

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

The idea behind Blackrock Muni Intermediate and The Gabelli Utility 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.