Correlation Between California High and Blackrock Muniassets
Can any of the company-specific risk be diversified away by investing in both California High and Blackrock Muniassets 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 California High and Blackrock Muniassets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between California High Yield Municipal and Blackrock Muniassets, you can compare the effects of market volatilities on California High and Blackrock Muniassets 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 California High with a short position of Blackrock Muniassets. Check out your portfolio center. Please also check ongoing floating volatility patterns of California High and Blackrock Muniassets.
Diversification Opportunities for California High and Blackrock Muniassets
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between California and Blackrock is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding California High Yield Municipa and Blackrock Muniassets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniassets and California High 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 California High Yield Municipal are associated (or correlated) with Blackrock Muniassets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniassets has no effect on the direction of California High i.e., California High and Blackrock Muniassets go up and down completely randomly.
Pair Corralation between California High and Blackrock Muniassets
Assuming the 90 days horizon California High is expected to generate 2.25 times less return on investment than Blackrock Muniassets. But when comparing it to its historical volatility, California High Yield Municipal is 1.4 times less risky than Blackrock Muniassets. It trades about 0.2 of its potential returns per unit of risk. Blackrock Muniassets is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,180 in Blackrock Muniassets on September 14, 2024 and sell it today you would earn a total of 19.00 from holding Blackrock Muniassets or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
California High Yield Municipa vs. Blackrock Muniassets
Performance |
| Timeline |
| California High Yield |
| Blackrock Muniassets |
California High and Blackrock Muniassets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with California High and Blackrock Muniassets
The main advantage of trading using opposite California High and Blackrock Muniassets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if California High position performs unexpectedly, Blackrock Muniassets 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 Muniassets will offset losses from the drop in Blackrock Muniassets' long position.| California High vs. Copeland Risk Managed | California High vs. Franklin High Income | California High vs. Intal High Relative | California High vs. Western Asset High |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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