Correlation Between Federated Premier and BlackRock Capital
Can any of the company-specific risk be diversified away by investing in both Federated Premier and BlackRock Capital 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 Federated Premier and BlackRock Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Premier Municipal and BlackRock Capital Allocation, you can compare the effects of market volatilities on Federated Premier and BlackRock Capital 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 Federated Premier with a short position of BlackRock Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Premier and BlackRock Capital.
Diversification Opportunities for Federated Premier and BlackRock Capital
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Federated and BlackRock is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Federated Premier Municipal and BlackRock Capital Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Capital and Federated Premier 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 Federated Premier Municipal are associated (or correlated) with BlackRock Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Capital has no effect on the direction of Federated Premier i.e., Federated Premier and BlackRock Capital go up and down completely randomly.
Pair Corralation between Federated Premier and BlackRock Capital
Considering the 90-day investment horizon Federated Premier is expected to generate 3.42 times less return on investment than BlackRock Capital. But when comparing it to its historical volatility, Federated Premier Municipal is 1.26 times less risky than BlackRock Capital. It trades about 0.03 of its potential returns per unit of risk. BlackRock Capital Allocation is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,118 in BlackRock Capital Allocation on August 24, 2024 and sell it today you would earn a total of 485.00 from holding BlackRock Capital Allocation or generate 43.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federated Premier Municipal vs. BlackRock Capital Allocation
Performance |
| Timeline |
| Federated Premier |
| BlackRock Capital |
Federated Premier and BlackRock Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Premier and BlackRock Capital
The main advantage of trading using opposite Federated Premier and BlackRock Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Premier position performs unexpectedly, BlackRock Capital 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 Capital will offset losses from the drop in BlackRock Capital's long position.| Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance National | Federated Premier vs. Blackrock Muniyield Quality | Federated Premier vs. Munivest Fund |
| BlackRock Capital vs. Invesco High Income | BlackRock Capital vs. Blackrock Muniholdings Ny | BlackRock Capital vs. MFS Investment Grade | BlackRock Capital vs. Federated Premier Municipal |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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