Correlation Between Blackrock Muniyield and HYB

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

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

Diversification Opportunities for Blackrock Muniyield and HYB

-0.03

Correlation Coefficient

Blackrock Muniyield  HYB

Good diversification

The 3 months correlation between Blackrock and HYB is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield Quality and HYB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYB 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 Quality are associated (or correlated) with HYB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYB has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and HYB go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and HYB

Considering the 90-day investment horizon Blackrock Muniyield Quality is expected to under-perform the HYB. In addition to that, Blackrock Muniyield is 2.02 times more volatile than HYB. It trades about -0.01 of its total potential returns per unit of risk. HYB is currently generating about 0.08 per unit of volatility. If you would invest  812.00  in HYB on December 27, 2024 and sell it today you would earn a total of  8.00  from holding HYB or generate 0.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	63.93%
Values	Daily Returns

Blackrock Muniyield Quality  vs.  HYB

Blackrock Muniyield

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Muniyield Quality has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong basic indicators, Blackrock Muniyield is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

HYB

Risk-Adjusted Performance

Modest

Over the last 90 days HYB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, HYB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Muniyield and HYB

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

The idea behind Blackrock Muniyield Quality and HYB 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.