Correlation Between Templeton Emerging and Blackrock Muniyield

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

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

Diversification Opportunities for Templeton Emerging and Blackrock Muniyield

0.11

Correlation Coefficient

Templeton Emerging  Blackrock Muniyield

Average diversification

The 3 months correlation between Templeton and Blackrock is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Emerging Markets and Blackrock Muniyield New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield New and Templeton Emerging 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 Templeton Emerging Markets 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 New has no effect on the direction of Templeton Emerging i.e., Templeton Emerging and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Templeton Emerging and Blackrock Muniyield

Considering the 90-day investment horizon Templeton Emerging Markets is expected to generate 1.31 times more return on investment than Blackrock Muniyield. However, Templeton Emerging is 1.31 times more volatile than Blackrock Muniyield New. It trades about 0.2 of its potential returns per unit of risk. Blackrock Muniyield New is currently generating about 0.0 per unit of risk. If you would invest  496.00  in Templeton Emerging Markets on December 30, 2024 and sell it today you would earn a total of  44.00  from holding Templeton Emerging Markets or generate 8.87% return on investment over 90 days.

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

Templeton Emerging Markets  vs.  Blackrock Muniyield New

Templeton Emerging

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Templeton Emerging Markets are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly fragile technical and fundamental indicators, Templeton Emerging may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Blackrock Muniyield New

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Muniyield New has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Blackrock Muniyield is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Templeton Emerging and Blackrock Muniyield

The main advantage of trading using opposite Templeton Emerging and Blackrock Muniyield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Emerging 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 Templeton Emerging Markets and Blackrock Muniyield New 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.