Correlation Between Blackrock Muni and Sprott Physical

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

Diversification Opportunities for Blackrock Muni and Sprott Physical

-0.01

Correlation Coefficient

Blackrock Muni  Sprott Physical

Good diversification

The 3 months correlation between Blackrock and Sprott is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muni Intermediate and Sprott Physical Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sprott Physical Gold 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 Sprott Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sprott Physical Gold has no effect on the direction of Blackrock Muni i.e., Blackrock Muni and Sprott Physical go up and down completely randomly.

Pair Corralation between Blackrock Muni and Sprott Physical

Considering the 90-day investment horizon Blackrock Muni Intermediate is expected to generate 0.59 times more return on investment than Sprott Physical. However, Blackrock Muni Intermediate is 1.69 times less risky than Sprott Physical. It trades about -0.03 of its potential returns per unit of risk. Sprott Physical Gold is currently generating about -0.02 per unit of risk. If you would invest  1,233  in Blackrock Muni Intermediate on September 27, 2024 and sell it today you would lose (14.00) from holding Blackrock Muni Intermediate or give up 1.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Blackrock Muni Intermediate  vs.  Sprott Physical Gold

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.

Sprott Physical Gold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sprott Physical Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sprott Physical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Blackrock Muni and Sprott Physical

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

The idea behind Blackrock Muni Intermediate and Sprott Physical Gold 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.