Correlation Between Blackrock Muniyield and Clearbridge Energy

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

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

Diversification Opportunities for Blackrock Muniyield and Clearbridge Energy

-0.21

Correlation Coefficient

Blackrock Muniyield  Clearbridge Energy

Very good diversification

The 3 months correlation between Blackrock and Clearbridge is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield and Clearbridge Energy Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearbridge Energy Mlp 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 Clearbridge Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearbridge Energy Mlp has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and Clearbridge Energy go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and Clearbridge Energy

Considering the 90-day investment horizon Blackrock Muniyield is expected to generate 0.41 times more return on investment than Clearbridge Energy. However, Blackrock Muniyield is 2.42 times less risky than Clearbridge Energy. It trades about -0.13 of its potential returns per unit of risk. Clearbridge Energy Mlp is currently generating about -0.12 per unit of risk. If you would invest  1,120  in Blackrock Muniyield on September 18, 2024 and sell it today you would lose (20.00) from holding Blackrock Muniyield or give up 1.79% of portfolio value over 90 days.

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

Blackrock Muniyield  vs.  Clearbridge Energy Mlp

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 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.

Clearbridge Energy Mlp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearbridge Energy Mlp are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of very unsteady primary indicators, Clearbridge Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock Muniyield and Clearbridge Energy

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

The idea behind Blackrock Muniyield and Clearbridge Energy Mlp 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.