Correlation Between BlackRock Intermediate and IShares BBB
Can any of the company-specific risk be diversified away by investing in both BlackRock Intermediate and IShares BBB 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 Intermediate and IShares BBB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BlackRock Intermediate Muni and iShares BBB Rated, you can compare the effects of market volatilities on BlackRock Intermediate and IShares BBB 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 Intermediate with a short position of IShares BBB. Check out your portfolio center. Please also check ongoing floating volatility patterns of BlackRock Intermediate and IShares BBB.
Diversification Opportunities for BlackRock Intermediate and IShares BBB
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BlackRock and IShares is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding BlackRock Intermediate Muni and iShares BBB Rated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares BBB Rated and BlackRock Intermediate 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 Intermediate Muni are associated (or correlated) with IShares BBB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares BBB Rated has no effect on the direction of BlackRock Intermediate i.e., BlackRock Intermediate and IShares BBB go up and down completely randomly.
Pair Corralation between BlackRock Intermediate and IShares BBB
Given the investment horizon of 90 days BlackRock Intermediate Muni is expected to generate 0.72 times more return on investment than IShares BBB. However, BlackRock Intermediate Muni is 1.4 times less risky than IShares BBB. It trades about 0.14 of its potential returns per unit of risk. iShares BBB Rated is currently generating about 0.1 per unit of risk. If you would invest 2,368 in BlackRock Intermediate Muni on August 30, 2024 and sell it today you would earn a total of 24.00 from holding BlackRock Intermediate Muni or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BlackRock Intermediate Muni vs. iShares BBB Rated
Performance |
| Timeline |
| BlackRock Intermediate |
| iShares BBB Rated |
BlackRock Intermediate and IShares BBB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BlackRock Intermediate and IShares BBB
The main advantage of trading using opposite BlackRock Intermediate and IShares BBB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BlackRock Intermediate position performs unexpectedly, IShares BBB 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 IShares BBB will offset losses from the drop in IShares BBB's long position.| BlackRock Intermediate vs. SSGA Active Trust | BlackRock Intermediate vs. SSGA Active Trust | BlackRock Intermediate vs. SPDR Nuveen Municipal |
| IShares BBB vs. iShares BB Rated | IShares BBB vs. iShares Aaa | IShares BBB vs. iShares Edge Investment | IShares BBB vs. BlackRock Intermediate Muni |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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