Correlation Between BlackRock Credit and BlackRock MIT
Can any of the company-specific risk be diversified away by investing in both BlackRock Credit and BlackRock MIT 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 Credit and BlackRock MIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock Credit Allocation and BlackRock MIT II, you can compare the effects of market volatilities on BlackRock Credit and BlackRock MIT 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 Credit with a short position of BlackRock MIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Credit and BlackRock MIT.
Diversification Opportunities for BlackRock Credit and BlackRock MIT
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BlackRock and BlackRock is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Credit Allocation and BlackRock MIT II in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock MIT II and BlackRock Credit 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 Credit Allocation are associated (or correlated) with BlackRock MIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock MIT II has no effect on the direction of BlackRock Credit i.e., BlackRock Credit and BlackRock MIT go up and down completely randomly.
Pair Corralation between BlackRock Credit and BlackRock MIT
Considering the 90-day investment horizon BlackRock Credit is expected to generate 1.22 times less return on investment than BlackRock MIT. But when comparing it to its historical volatility, BlackRock Credit Allocation is 1.13 times less risky than BlackRock MIT. It trades about 0.25 of its potential returns per unit of risk. BlackRock MIT II is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,037 in BlackRock MIT II on October 24, 2024 and sell it today you would earn a total of 28.00 from holding BlackRock MIT II or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock Credit Allocation vs. BlackRock MIT II
Performance |
| Timeline |
| BlackRock Credit All |
| BlackRock MIT II |
BlackRock Credit and BlackRock MIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock Credit and BlackRock MIT
The main advantage of trading using opposite BlackRock Credit and BlackRock MIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Credit position performs unexpectedly, BlackRock MIT 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 MIT will offset losses from the drop in BlackRock MIT's long position.| BlackRock Credit vs. Pimco Corporate Income | BlackRock Credit vs. Pimco Income Strategy | BlackRock Credit vs. Pcm Fund | BlackRock Credit vs. Pimco High Income |
| BlackRock MIT vs. Blackrock Munivest | BlackRock MIT vs. Invesco Municipal Trust | BlackRock MIT vs. BlackRock Municipal Income | BlackRock MIT vs. Eaton Vance Mbf |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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