Correlation Between Munivest Fund and BlackRock California

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

By analyzing existing cross correlation between Munivest Fund and BlackRock California Municipal, you can compare the effects of market volatilities on Munivest Fund and BlackRock California 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 Munivest Fund with a short position of BlackRock California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Munivest Fund and BlackRock California.

Diversification Opportunities for Munivest Fund and BlackRock California

0.65

Correlation Coefficient

Munivest Fund  BlackRock California

Poor diversification

The 3 months correlation between Munivest and BlackRock is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Munivest Fund and BlackRock California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock California and Munivest Fund 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 Munivest Fund are associated (or correlated) with BlackRock California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock California has no effect on the direction of Munivest Fund i.e., Munivest Fund and BlackRock California go up and down completely randomly.

Pair Corralation between Munivest Fund and BlackRock California

Considering the 90-day investment horizon Munivest Fund is expected to generate 1.08 times more return on investment than BlackRock California. However, Munivest Fund is 1.08 times more volatile than BlackRock California Municipal. It trades about 0.04 of its potential returns per unit of risk. BlackRock California Municipal is currently generating about -0.01 per unit of risk. If you would invest  691.00  in Munivest Fund on December 30, 2024 and sell it today you would earn a total of  12.00  from holding Munivest Fund or generate 1.74% return on investment over 90 days.

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

Munivest Fund  vs.  BlackRock California Municipal

Munivest Fund

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Munivest Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Munivest Fund is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BlackRock California

Risk-Adjusted Performance

Very Weak

Over the last 90 days BlackRock California Municipal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, BlackRock California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Munivest Fund and BlackRock California

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

The idea behind Munivest Fund and BlackRock California Municipal 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.