Correlation Between Blackrock Munivest and Federated Investors

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

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

Diversification Opportunities for Blackrock Munivest and Federated Investors

-0.63

Correlation Coefficient

Blackrock Munivest  Federated Investors

Excellent diversification

The 3 months correlation between Blackrock and Federated is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Munivest and Federated Investors B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Investors 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 Federated Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Investors has no effect on the direction of Blackrock Munivest i.e., Blackrock Munivest and Federated Investors go up and down completely randomly.

Pair Corralation between Blackrock Munivest and Federated Investors

Considering the 90-day investment horizon Blackrock Munivest is expected to generate 2.44 times less return on investment than Federated Investors. But when comparing it to its historical volatility, Blackrock Munivest is 1.71 times less risky than Federated Investors. It trades about 0.18 of its potential returns per unit of risk. Federated Investors B is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  4,000  in Federated Investors B on August 31, 2024 and sell it today you would earn a total of  284.00  from holding Federated Investors B or generate 7.1% return on investment over 90 days.

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

Blackrock Munivest  vs.  Federated Investors B

Blackrock Munivest

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Munivest are ranked lower than 1 (%) 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.

Federated Investors

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Investors B are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Federated Investors demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock Munivest and Federated Investors

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

The idea behind Blackrock Munivest and Federated Investors B 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.