Correlation Between New Mountain and Blackrock Muniyield

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

By analyzing existing cross correlation between New Mountain Finance and Blackrock Muniyield, you can compare the effects of market volatilities on New Mountain and Blackrock Muniyield 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 New Mountain with a short position of Blackrock Muniyield. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Mountain and Blackrock Muniyield.

Diversification Opportunities for New Mountain and Blackrock Muniyield

0.68

Correlation Coefficient

New Mountain  Blackrock Muniyield

Poor diversification

The 3 months correlation between New and Blackrock is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding New Mountain Finance and Blackrock Muniyield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and New Mountain 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 New Mountain Finance are associated (or correlated) with Blackrock Muniyield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniyield has no effect on the direction of New Mountain i.e., New Mountain and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between New Mountain and Blackrock Muniyield

Given the investment horizon of 90 days New Mountain is expected to generate 2.05 times less return on investment than Blackrock Muniyield. In addition to that, New Mountain is 1.57 times more volatile than Blackrock Muniyield. It trades about 0.02 of its total potential returns per unit of risk. Blackrock Muniyield is currently generating about 0.06 per unit of volatility. If you would invest  1,024  in Blackrock Muniyield on December 28, 2024 and sell it today you would earn a total of  21.00  from holding Blackrock Muniyield or generate 2.05% return on investment over 90 days.

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

New Mountain Finance  vs.  Blackrock Muniyield

New Mountain Finance

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Mountain Finance are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, New Mountain is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Blackrock Muniyield

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniyield are ranked lower than 5 (%) 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.

Pair Trading with New Mountain and Blackrock Muniyield

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

The idea behind New Mountain Finance and Blackrock Muniyield 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.