Correlation Between Blackrock Munivest and Sprott Focus

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

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

Diversification Opportunities for Blackrock Munivest and Sprott Focus

0.47

Correlation Coefficient

Blackrock Munivest  Sprott Focus

Very weak diversification

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

Pair Corralation between Blackrock Munivest and Sprott Focus

Considering the 90-day investment horizon Blackrock Munivest is expected to generate 1.56 times less return on investment than Sprott Focus. But when comparing it to its historical volatility, Blackrock Munivest is 1.2 times less risky than Sprott Focus. It trades about 0.05 of its potential returns per unit of risk. Sprott Focus Trust is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  712.00  in Sprott Focus Trust on December 29, 2024 and sell it today you would earn a total of  24.00  from holding Sprott Focus Trust or generate 3.37% return on investment over 90 days.

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

Blackrock Munivest  vs.  Sprott Focus Trust

Blackrock Munivest

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Munivest are ranked lower than 4 (%) 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.

Sprott Focus Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sprott Focus Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Sprott Focus 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 Munivest and Sprott Focus

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

The idea behind Blackrock Munivest and Sprott Focus Trust 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 Anywhere module to track or share privately all of your investments from the convenience of any device.