Correlation Between Blackrock Muniyield and Ares Management

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

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

Diversification Opportunities for Blackrock Muniyield and Ares Management

-0.49

Correlation Coefficient

Blackrock Muniyield  Ares Management

Very good diversification

The 3 months correlation between Blackrock and Ares is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield and Ares Management LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management LP and Blackrock Muniyield 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 Muniyield are associated (or correlated) with Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management LP has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and Ares Management go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and Ares Management

Considering the 90-day investment horizon Blackrock Muniyield is expected to under-perform the Ares Management. But the fund apears to be less risky and, when comparing its historical volatility, Blackrock Muniyield is 2.59 times less risky than Ares Management. The fund trades about -0.39 of its potential returns per unit of risk. The Ares Management LP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  17,522  in Ares Management LP on October 11, 2024 and sell it today you would earn a total of  708.00  from holding Ares Management LP or generate 4.04% return on investment over 90 days.

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

Blackrock Muniyield  vs.  Ares Management LP

Blackrock Muniyield

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniyield has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest inconsistent performance, the Fund's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Ares Management LP

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ares Management LP are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Ares Management unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Blackrock Muniyield and Ares Management

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

The idea behind Blackrock Muniyield and Ares Management LP 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 Transaction History module to view history of all your transactions and understand their impact on performance.