Correlation Between Blackrock Muniyield and General American
Can any of the company-specific risk be diversified away by investing in both Blackrock Muniyield and General American 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 General American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Muniyield and General American Investors, you can compare the effects of market volatilities on Blackrock Muniyield and General American 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 General American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniyield and General American.
Diversification Opportunities for Blackrock Muniyield and General American
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Blackrock and General is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield and General American Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General American Inv 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 General American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General American Inv has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and General American go up and down completely randomly.
Pair Corralation between Blackrock Muniyield and General American
Considering the 90-day investment horizon Blackrock Muniyield is expected to generate 1.53 times more return on investment than General American. However, Blackrock Muniyield is 1.53 times more volatile than General American Investors. It trades about 0.22 of its potential returns per unit of risk. General American Investors is currently generating about -0.39 per unit of risk. If you would invest 1,063 in Blackrock Muniyield on December 1, 2024 and sell it today you would earn a total of 25.00 from holding Blackrock Muniyield or generate 2.35% 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. General American Investors
Performance |
Timeline |
Blackrock Muniyield |
General American Inv |
Blackrock Muniyield and General American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Blackrock Muniyield and General American
The main advantage of trading using opposite Blackrock Muniyield and General American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniyield position performs unexpectedly, General American 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 General American will offset losses from the drop in General American's long position.The idea behind Blackrock Muniyield and General American Investors 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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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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