Correlation Between BlackRock and Federated Premier
Can any of the company-specific risk be diversified away by investing in both BlackRock and Federated Premier 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 and Federated Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock and Federated Premier Municipal, you can compare the effects of market volatilities on BlackRock and Federated Premier 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 with a short position of Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock and Federated Premier.
Diversification Opportunities for BlackRock and Federated Premier
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BlackRock and Federated is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier and BlackRock 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 are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of BlackRock i.e., BlackRock and Federated Premier go up and down completely randomly.
Pair Corralation between BlackRock and Federated Premier
Considering the 90-day investment horizon BlackRock is expected to generate 1.69 times more return on investment than Federated Premier. However, BlackRock is 1.69 times more volatile than Federated Premier Municipal. It trades about 0.19 of its potential returns per unit of risk. Federated Premier Municipal is currently generating about 0.04 per unit of risk. If you would invest 76,504 in BlackRock on September 3, 2024 and sell it today you would earn a total of 25,776 from holding BlackRock or generate 33.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock vs. Federated Premier Municipal
Performance |
| Timeline |
| BlackRock |
| Federated Premier |
BlackRock and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock and Federated Premier
The main advantage of trading using opposite BlackRock and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock position performs unexpectedly, Federated Premier 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 Federated Premier will offset losses from the drop in Federated Premier's long position.| BlackRock vs. Federated Premier Municipal | BlackRock vs. Blackrock Muniyield | BlackRock vs. Federated Investors B | BlackRock vs. SEI Investments |
| Federated Premier vs. Tekla Healthcare Investors | Federated Premier vs. Tekla Life Sciences | Federated Premier vs. Cohen Steers Reit | Federated Premier vs. XAI Octagon Floating |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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