Correlation Between BlackRock Municipal and Croghan Bancshares
Can any of the company-specific risk be diversified away by investing in both BlackRock Municipal and Croghan Bancshares 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 Municipal and Croghan Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock Municipal Income and Croghan Bancshares, you can compare the effects of market volatilities on BlackRock Municipal and Croghan Bancshares 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 Municipal with a short position of Croghan Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Municipal and Croghan Bancshares.
Diversification Opportunities for BlackRock Municipal and Croghan Bancshares
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BlackRock and Croghan is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Municipal Income and Croghan Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Croghan Bancshares and BlackRock Municipal 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 Municipal Income are associated (or correlated) with Croghan Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Croghan Bancshares has no effect on the direction of BlackRock Municipal i.e., BlackRock Municipal and Croghan Bancshares go up and down completely randomly.
Pair Corralation between BlackRock Municipal and Croghan Bancshares
Considering the 90-day investment horizon BlackRock Municipal Income is expected to generate 0.34 times more return on investment than Croghan Bancshares. However, BlackRock Municipal Income is 2.97 times less risky than Croghan Bancshares. It trades about 0.38 of its potential returns per unit of risk. Croghan Bancshares is currently generating about -0.02 per unit of risk. If you would invest 977.00 in BlackRock Municipal Income on October 23, 2024 and sell it today you would earn a total of 35.00 from holding BlackRock Municipal Income or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
BlackRock Municipal Income vs. Croghan Bancshares
Performance |
| Timeline |
| BlackRock Municipal |
| Croghan Bancshares |
BlackRock Municipal and Croghan Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock Municipal and Croghan Bancshares
The main advantage of trading using opposite BlackRock Municipal and Croghan Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Municipal position performs unexpectedly, Croghan Bancshares 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 Croghan Bancshares will offset losses from the drop in Croghan Bancshares' long position.The idea behind BlackRock Municipal Income and Croghan Bancshares 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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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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