Correlation Between Pioneer Floating and Blackrock Muniholdings

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

By analyzing existing cross correlation between Pioneer Floating Rate and Blackrock Muniholdings Quality, you can compare the effects of market volatilities on Pioneer Floating and Blackrock Muniholdings 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 Pioneer Floating with a short position of Blackrock Muniholdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pioneer Floating and Blackrock Muniholdings.

Diversification Opportunities for Pioneer Floating and Blackrock Muniholdings

0.47

Correlation Coefficient

Pioneer Floating  Blackrock Muniholdings

Very weak diversification

The 3 months correlation between Pioneer and Blackrock is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Floating Rate and Blackrock Muniholdings Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings and Pioneer Floating 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 Pioneer Floating Rate are associated (or correlated) with Blackrock Muniholdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniholdings has no effect on the direction of Pioneer Floating i.e., Pioneer Floating and Blackrock Muniholdings go up and down completely randomly.

Pair Corralation between Pioneer Floating and Blackrock Muniholdings

Considering the 90-day investment horizon Pioneer Floating Rate is expected to under-perform the Blackrock Muniholdings. But the etf apears to be less risky and, when comparing its historical volatility, Pioneer Floating Rate is 2.09 times less risky than Blackrock Muniholdings. The etf trades about -0.03 of its potential returns per unit of risk. The Blackrock Muniholdings Quality is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  981.00  in Blackrock Muniholdings Quality on December 29, 2024 and sell it today you would earn a total of  19.00  from holding Blackrock Muniholdings Quality or generate 1.94% return on investment over 90 days.

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

Pioneer Floating Rate  vs.  Blackrock Muniholdings Quality

Pioneer Floating Rate

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pioneer Floating Rate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, Pioneer Floating is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Blackrock Muniholdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniholdings Quality are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Blackrock Muniholdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Pioneer Floating and Blackrock Muniholdings

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

The idea behind Pioneer Floating Rate and Blackrock Muniholdings Quality 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.