Correlation Between Blackrock Munivest and FAM

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

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

Diversification Opportunities for Blackrock Munivest and FAM

-0.47

Correlation Coefficient

Blackrock Munivest  FAM

Very good diversification

The 3 months correlation between Blackrock and FAM is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Munivest and FAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAM and Blackrock Munivest 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 Munivest are associated (or correlated) with FAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAM has no effect on the direction of Blackrock Munivest i.e., Blackrock Munivest and FAM go up and down completely randomly.

Pair Corralation between Blackrock Munivest and FAM

Considering the 90-day investment horizon Blackrock Munivest is expected to generate 17.1 times less return on investment than FAM. But when comparing it to its historical volatility, Blackrock Munivest is 1.66 times less risky than FAM. It trades about 0.03 of its potential returns per unit of risk. FAM is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  647.00  in FAM on September 5, 2024 and sell it today you would earn a total of  27.00  from holding FAM or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	21.88%
Values	Daily Returns

Blackrock Munivest  vs.  FAM

Blackrock Munivest

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Munivest are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Blackrock Munivest is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FAM

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days FAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very uncertain basic indicators, FAM displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock Munivest and FAM

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

The idea behind Blackrock Munivest and FAM 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.