Correlation Between Standard Life and Blackrock Muniyield

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

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

Diversification Opportunities for Standard Life and Blackrock Muniyield

0.27

Correlation Coefficient

Standard Life  Blackrock Muniyield

Modest diversification

The 3 months correlation between Standard and Blackrock is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Standard Life Aberdeen and Blackrock Muniyield Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and Standard Life 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 Standard Life Aberdeen 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 Standard Life i.e., Standard Life and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Standard Life and Blackrock Muniyield

Assuming the 90 days horizon Standard Life Aberdeen is expected to generate 4.47 times more return on investment than Blackrock Muniyield. However, Standard Life is 4.47 times more volatile than Blackrock Muniyield Quality. It trades about 0.16 of its potential returns per unit of risk. Blackrock Muniyield Quality is currently generating about 0.05 per unit of risk. If you would invest  706.00  in Standard Life Aberdeen on December 22, 2024 and sell it today you would earn a total of  199.00  from holding Standard Life Aberdeen or generate 28.19% return on investment over 90 days.

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

Standard Life Aberdeen  vs.  Blackrock Muniyield Quality

Standard Life Aberdeen

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Life Aberdeen are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Standard Life showed solid returns over the last few months and may actually be approaching a breakup point.

Blackrock Muniyield

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniyield Quality are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Blackrock Muniyield is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Standard Life and Blackrock Muniyield

The main advantage of trading using opposite Standard Life and Blackrock Muniyield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Life 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 Standard Life Aberdeen and Blackrock Muniyield 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.