Correlation Between BlackRock California and Blackrock Muniyield
Can any of the company-specific risk be diversified away by investing in both BlackRock California 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 BlackRock California and Blackrock Muniyield into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock California Municipal and Blackrock Muniyield, you can compare the effects of market volatilities on BlackRock California 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 BlackRock California with a short position of Blackrock Muniyield. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock California and Blackrock Muniyield.
Diversification Opportunities for BlackRock California and Blackrock Muniyield
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlackRock and Blackrock is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock California Municipal and Blackrock Muniyield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and BlackRock California 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 California Municipal 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 BlackRock California i.e., BlackRock California and Blackrock Muniyield go up and down completely randomly.
Pair Corralation between BlackRock California and Blackrock Muniyield
Considering the 90-day investment horizon BlackRock California Municipal is expected to under-perform the Blackrock Muniyield. But the stock apears to be less risky and, when comparing its historical volatility, BlackRock California Municipal is 1.32 times less risky than Blackrock Muniyield. The stock trades about -0.01 of its potential returns per unit of risk. The Blackrock Muniyield is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,124 in Blackrock Muniyield on September 12, 2024 and sell it today you would earn a total of 4.00 from holding Blackrock Muniyield or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock California Municipal vs. Blackrock Muniyield
Performance |
| Timeline |
| BlackRock California |
| Blackrock Muniyield |
BlackRock California and Blackrock Muniyield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock California and Blackrock Muniyield
The main advantage of trading using opposite BlackRock California and Blackrock Muniyield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock California 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.| BlackRock California vs. Blackrock Muniyield Quality | BlackRock California vs. Blackrock Muni Intermediate | BlackRock California vs. Nuveen California Amt | BlackRock California vs. Munivest Fund |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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