Correlation Between BlackRock Municipal and BlackRock Long
Can any of the company-specific risk be diversified away by investing in both BlackRock Municipal and BlackRock Long 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 BlackRock Long 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 BlackRock Long Term Municipal, you can compare the effects of market volatilities on BlackRock Municipal and BlackRock Long 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 BlackRock Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Municipal and BlackRock Long.
Diversification Opportunities for BlackRock Municipal and BlackRock Long
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BlackRock and BlackRock is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Municipal Income and BlackRock Long Term Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Long Term 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 BlackRock Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Long Term has no effect on the direction of BlackRock Municipal i.e., BlackRock Municipal and BlackRock Long go up and down completely randomly.
Pair Corralation between BlackRock Municipal and BlackRock Long
Considering the 90-day investment horizon BlackRock Municipal Income is expected to generate 0.97 times more return on investment than BlackRock Long. However, BlackRock Municipal Income is 1.03 times less risky than BlackRock Long. It trades about 0.12 of its potential returns per unit of risk. BlackRock Long Term Municipal is currently generating about 0.1 per unit of risk. If you would invest 1,073 in BlackRock Municipal Income on August 31, 2024 and sell it today you would earn a total of 98.00 from holding BlackRock Municipal Income or generate 9.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock Municipal Income vs. BlackRock Long Term Municipal
Performance |
| Timeline |
| BlackRock Municipal |
| BlackRock Long Term |
BlackRock Municipal and BlackRock Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock Municipal and BlackRock Long
The main advantage of trading using opposite BlackRock Municipal and BlackRock Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Municipal position performs unexpectedly, BlackRock Long 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 Long will offset losses from the drop in BlackRock Long's long position.| BlackRock Municipal vs. HUMANA INC | BlackRock Municipal vs. SCOR PK | BlackRock Municipal vs. Aquagold International | BlackRock Municipal vs. Thrivent High Yield |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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