Correlation Between Blackrock Muniassets and Pioneer Municipal

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

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

Diversification Opportunities for Blackrock Muniassets and Pioneer Municipal

0.9

Correlation Coefficient

Blackrock Muniassets  Pioneer Municipal

Almost no diversification

The 3 months correlation between Blackrock and Pioneer is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniassets and Pioneer Municipal High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Municipal High and Blackrock Muniassets 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 Blackrock Muniassets are associated (or correlated) with Pioneer Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Municipal High has no effect on the direction of Blackrock Muniassets i.e., Blackrock Muniassets and Pioneer Municipal go up and down completely randomly.

Pair Corralation between Blackrock Muniassets and Pioneer Municipal

Assuming the 90 days horizon Blackrock Muniassets is expected to generate 1.32 times more return on investment than Pioneer Municipal. However, Blackrock Muniassets is 1.32 times more volatile than Pioneer Municipal High. It trades about -0.06 of its potential returns per unit of risk. Pioneer Municipal High is currently generating about -0.12 per unit of risk. If you would invest  1,156  in Blackrock Muniassets on December 30, 2024 and sell it today you would lose (18.00) from holding Blackrock Muniassets or give up 1.56% of portfolio value over 90 days.

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

Blackrock Muniassets  vs.  Pioneer Municipal High

Blackrock Muniassets

Risk-Adjusted Performance

Very Weak

Over the last 90 days Blackrock Muniassets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Blackrock Muniassets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pioneer Municipal High

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pioneer Municipal High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Pioneer Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Muniassets and Pioneer Municipal

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

The idea behind Blackrock Muniassets and Pioneer Municipal High 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.