Correlation Between Blackrock Muniyield and TPG

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

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

Diversification Opportunities for Blackrock Muniyield and TPG

-0.24

Correlation Coefficient

Blackrock Muniyield  TPG

Very good diversification

The 3 months correlation between Blackrock and TPG is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield and TPG Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPG Inc 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 TPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPG Inc has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and TPG go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and TPG

Considering the 90-day investment horizon Blackrock Muniyield is expected to generate 9.88 times less return on investment than TPG. But when comparing it to its historical volatility, Blackrock Muniyield is 3.08 times less risky than TPG. It trades about 0.03 of its potential returns per unit of risk. TPG Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2,619  in TPG Inc on September 23, 2024 and sell it today you would earn a total of  3,863  from holding TPG Inc or generate 147.5% 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.  TPG Inc

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.

TPG Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TPG Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, TPG may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Blackrock Muniyield and TPG

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

The idea behind Blackrock Muniyield and TPG Inc 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.