Correlation Between Blackrock Munivest and Blackrock Muniholdings

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

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

Diversification Opportunities for Blackrock Munivest and Blackrock Muniholdings

0.89

Correlation Coefficient

Blackrock Munivest  Blackrock Muniholdings

Very poor diversification

The 3 months correlation between Blackrock and Blackrock is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Munivest and Blackrock Muniholdings Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings 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 Blackrock Muniholdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniholdings has no effect on the direction of Blackrock Munivest i.e., Blackrock Munivest and Blackrock Muniholdings go up and down completely randomly.

Pair Corralation between Blackrock Munivest and Blackrock Muniholdings

Considering the 90-day investment horizon Blackrock Munivest is expected to generate 0.97 times more return on investment than Blackrock Muniholdings. However, Blackrock Munivest is 1.03 times less risky than Blackrock Muniholdings. It trades about -0.02 of its potential returns per unit of risk. Blackrock Muniholdings Quality is currently generating about -0.04 per unit of risk. If you would invest  1,110  in Blackrock Munivest on November 28, 2024 and sell it today you would lose (12.00) from holding Blackrock Munivest or give up 1.08% of portfolio value over 90 days.

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

Blackrock Munivest  vs.  Blackrock Muniholdings Quality

Blackrock Munivest

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Munivest has generated negative risk-adjusted returns adding no value to fund investors. 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.

Blackrock Muniholdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Muniholdings Quality has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound basic indicators, Blackrock Muniholdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blackrock Munivest and Blackrock Muniholdings

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

The idea behind Blackrock Munivest and Blackrock Muniholdings Quality 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.