Correlation Between DWS Municipal and Blackrock Muniholdings
Can any of the company-specific risk be diversified away by investing in both DWS Municipal 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 DWS Municipal and Blackrock Muniholdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DWS Municipal Income and Blackrock Muniholdings Closed, you can compare the effects of market volatilities on DWS Municipal 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 DWS Municipal with a short position of Blackrock Muniholdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of DWS Municipal and Blackrock Muniholdings.
Diversification Opportunities for DWS Municipal and Blackrock Muniholdings
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DWS and Blackrock is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding DWS Municipal Income and Blackrock Muniholdings Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings and DWS 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 DWS Municipal Income 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 DWS Municipal i.e., DWS Municipal and Blackrock Muniholdings go up and down completely randomly.
Pair Corralation between DWS Municipal and Blackrock Muniholdings
Considering the 90-day investment horizon DWS Municipal Income is expected to generate 1.06 times more return on investment than Blackrock Muniholdings. However, DWS Municipal is 1.06 times more volatile than Blackrock Muniholdings Closed. It trades about 0.07 of its potential returns per unit of risk. Blackrock Muniholdings Closed is currently generating about 0.04 per unit of risk. If you would invest 797.00 in DWS Municipal Income on August 27, 2024 and sell it today you would earn a total of 189.00 from holding DWS Municipal Income or generate 23.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DWS Municipal Income vs. Blackrock Muniholdings Closed
Performance |
| Timeline |
| DWS Municipal Income |
| Blackrock Muniholdings |
DWS Municipal and Blackrock Muniholdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DWS Municipal and Blackrock Muniholdings
The main advantage of trading using opposite DWS Municipal and Blackrock Muniholdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DWS Municipal 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.| DWS Municipal vs. DTF Tax Free | DWS Municipal vs. Blackrock Muniyield Quality | DWS Municipal vs. Blackrock Muni Intermediate | DWS Municipal vs. Blackrock Muniholdings Quality |
| Blackrock Muniholdings vs. DTF Tax Free | Blackrock Muniholdings vs. MFS High Yield | Blackrock Muniholdings vs. MFS High Income | Blackrock Muniholdings vs. John Hancock Income |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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