Correlation Between First Trust and Blackrock Muniholdings
Can any of the company-specific risk be diversified away by investing in both First Trust and Blackrock Muniholdings 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 First Trust and Blackrock Muniholdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Senior and Blackrock Muniholdings Closed, you can compare the effects of market volatilities on First Trust and Blackrock Muniholdings 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 First Trust with a short position of Blackrock Muniholdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Blackrock Muniholdings.
Diversification Opportunities for First Trust and Blackrock Muniholdings
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between First and Blackrock is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Senior and Blackrock Muniholdings Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings and First Trust 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 First Trust Senior are associated (or correlated) with Blackrock Muniholdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniholdings has no effect on the direction of First Trust i.e., First Trust and Blackrock Muniholdings go up and down completely randomly.
Pair Corralation between First Trust and Blackrock Muniholdings
Considering the 90-day investment horizon First Trust is expected to generate 1.46 times less return on investment than Blackrock Muniholdings. But when comparing it to its historical volatility, First Trust Senior is 1.15 times less risky than Blackrock Muniholdings. It trades about 0.15 of its potential returns per unit of risk. Blackrock Muniholdings Closed is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,163 in Blackrock Muniholdings Closed on November 20, 2024 and sell it today you would earn a total of 56.00 from holding Blackrock Muniholdings Closed or generate 4.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Senior vs. Blackrock Muniholdings Closed
Performance |
| Timeline |
| First Trust Senior |
| Blackrock Muniholdings |
First Trust and Blackrock Muniholdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Blackrock Muniholdings
The main advantage of trading using opposite First Trust and Blackrock Muniholdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust position performs unexpectedly, Blackrock Muniholdings 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 Muniholdings will offset losses from the drop in Blackrock Muniholdings' long position.| First Trust vs. Blackstone Gso Long | First Trust vs. Eaton Vance Senior | First Trust vs. Western Asset Global | First Trust vs. Western Asset Global |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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