Correlation Between Municipal Total and Blackrock Allocation

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

By analyzing existing cross correlation between Municipal Total Return and Blackrock Allocation Target, you can compare the effects of market volatilities on Municipal Total and Blackrock Allocation 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 Municipal Total with a short position of Blackrock Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Total and Blackrock Allocation.

Diversification Opportunities for Municipal Total and Blackrock Allocation

0.4

Correlation Coefficient

Municipal Total  Blackrock Allocation

Very weak diversification

The 3 months correlation between Municipal and BlackRock is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Total Return and Blackrock Allocation Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Allocation and Municipal Total 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 Municipal Total Return are associated (or correlated) with Blackrock Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Allocation has no effect on the direction of Municipal Total i.e., Municipal Total and Blackrock Allocation go up and down completely randomly.

Pair Corralation between Municipal Total and Blackrock Allocation

Assuming the 90 days horizon Municipal Total is expected to generate 3.12 times less return on investment than Blackrock Allocation. In addition to that, Municipal Total is 1.83 times more volatile than Blackrock Allocation Target. It trades about 0.05 of its total potential returns per unit of risk. Blackrock Allocation Target is currently generating about 0.28 per unit of volatility. If you would invest  943.00  in Blackrock Allocation Target on October 24, 2024 and sell it today you would earn a total of  6.00  from holding Blackrock Allocation Target or generate 0.64% return on investment over 90 days.

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

Municipal Total Return  vs.  Blackrock Allocation Target

Municipal Total Return

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Municipal Total Return are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Municipal Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Allocation

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Allocation Target are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Allocation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Municipal Total and Blackrock Allocation

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

The idea behind Municipal Total Return and Blackrock Allocation Target 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.