Correlation Between BlackRock High and First Trust
Can any of the company-specific risk be diversified away by investing in both BlackRock High and First Trust 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 High and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock High Yield and First Trust Municipal, you can compare the effects of market volatilities on BlackRock High and First Trust 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 High with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock High and First Trust.
Diversification Opportunities for BlackRock High and First Trust
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BlackRock and First is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock High Yield and First Trust Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Municipal and BlackRock High 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 High Yield are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Municipal has no effect on the direction of BlackRock High i.e., BlackRock High and First Trust go up and down completely randomly.
Pair Corralation between BlackRock High and First Trust
Given the investment horizon of 90 days BlackRock High Yield is expected to generate 1.27 times more return on investment than First Trust. However, BlackRock High is 1.27 times more volatile than First Trust Municipal. It trades about 0.09 of its potential returns per unit of risk. First Trust Municipal is currently generating about 0.08 per unit of risk. If you would invest 1,954 in BlackRock High Yield on December 4, 2024 and sell it today you would earn a total of 333.00 from holding BlackRock High Yield or generate 17.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 96.96% |
| Values | Daily Returns |
BlackRock High Yield vs. First Trust Municipal
Performance |
| Timeline |
| BlackRock High Yield |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| First Trust Municipal |
BlackRock High and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock High and First Trust
The main advantage of trading using opposite BlackRock High and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock High position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| BlackRock High vs. BlackRock Intermediate Muni | ||
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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