Correlation Between Blackrock Muniyield and Carlyle Secured

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

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

Diversification Opportunities for Blackrock Muniyield and Carlyle Secured

-0.11

Correlation Coefficient

Blackrock Muniyield  Carlyle Secured

Good diversification

The 3 months correlation between Blackrock and Carlyle is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield and Carlyle Secured Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlyle Secured Lending 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 Carlyle Secured. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlyle Secured Lending has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and Carlyle Secured go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and Carlyle Secured

Considering the 90-day investment horizon Blackrock Muniyield is expected to generate 0.46 times more return on investment than Carlyle Secured. However, Blackrock Muniyield is 2.19 times less risky than Carlyle Secured. It trades about 0.08 of its potential returns per unit of risk. Carlyle Secured Lending is currently generating about -0.07 per unit of risk. If you would invest  1,024  in Blackrock Muniyield on December 29, 2024 and sell it today you would earn a total of  29.00  from holding Blackrock Muniyield or generate 2.83% return on investment over 90 days.

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

Blackrock Muniyield  vs.  Carlyle Secured Lending

Blackrock Muniyield

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniyield are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Blackrock Muniyield is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Carlyle Secured Lending

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlyle Secured Lending has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Carlyle Secured is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Blackrock Muniyield and Carlyle Secured

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

The idea behind Blackrock Muniyield and Carlyle Secured Lending 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.