Correlation Between Virtus AllianzGI and Blackrock Muni

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

By analyzing existing cross correlation between Virtus AllianzGI Convertible and Blackrock Muni Intermediate, you can compare the effects of market volatilities on Virtus AllianzGI and Blackrock Muni 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 Virtus AllianzGI with a short position of Blackrock Muni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Virtus AllianzGI and Blackrock Muni.

Diversification Opportunities for Virtus AllianzGI and Blackrock Muni

-0.15

Correlation Coefficient

Virtus AllianzGI  Blackrock Muni

Good diversification

The 3 months correlation between Virtus and Blackrock is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Virtus AllianzGI Convertible and Blackrock Muni Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muni Inter and Virtus AllianzGI 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 Virtus AllianzGI Convertible are associated (or correlated) with Blackrock Muni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muni Inter has no effect on the direction of Virtus AllianzGI i.e., Virtus AllianzGI and Blackrock Muni go up and down completely randomly.

Pair Corralation between Virtus AllianzGI and Blackrock Muni

Assuming the 90 days trading horizon Virtus AllianzGI Convertible is expected to under-perform the Blackrock Muni. But the preferred stock apears to be less risky and, when comparing its historical volatility, Virtus AllianzGI Convertible is 1.53 times less risky than Blackrock Muni. The preferred stock trades about -0.3 of its potential returns per unit of risk. The Blackrock Muni Intermediate is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  1,245  in Blackrock Muni Intermediate on September 26, 2024 and sell it today you would lose (26.00) from holding Blackrock Muni Intermediate or give up 2.09% of portfolio value over 90 days.

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

Virtus AllianzGI Convertible  vs.  Blackrock Muni Intermediate

Virtus AllianzGI Con

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Virtus AllianzGI Convertible has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Blackrock Muni Inter

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Virtus AllianzGI and Blackrock Muni

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

The idea behind Virtus AllianzGI Convertible and Blackrock Muni Intermediate 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.