Correlation Between Blackrock Muniyield and PennantPark Floating

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

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

Diversification Opportunities for Blackrock Muniyield and PennantPark Floating

0.65

Correlation Coefficient

Blackrock Muniyield  PennantPark Floating

Poor diversification

The 3 months correlation between Blackrock and PennantPark is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield and PennantPark Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PennantPark Floating Rate 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 PennantPark Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PennantPark Floating Rate has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and PennantPark Floating go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and PennantPark Floating

Considering the 90-day investment horizon Blackrock Muniyield is expected to generate 2.37 times less return on investment than PennantPark Floating. But when comparing it to its historical volatility, Blackrock Muniyield is 1.64 times less risky than PennantPark Floating. It trades about 0.08 of its potential returns per unit of risk. PennantPark Floating Rate is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,056  in PennantPark Floating Rate on December 30, 2024 and sell it today you would earn a total of  72.00  from holding PennantPark Floating Rate or generate 6.82% return on investment over 90 days.

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

Blackrock Muniyield  vs.  PennantPark Floating Rate

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

PennantPark Floating Rate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PennantPark Floating Rate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, PennantPark Floating may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Blackrock Muniyield and PennantPark Floating

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

The idea behind Blackrock Muniyield and PennantPark Floating Rate 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..