Correlation Between BNY Mellon and Blackrock Muniholdings

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Can any of the company-specific risk be diversified away by investing in both BNY Mellon 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 BNY Mellon and Blackrock Muniholdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BNY Mellon Strategic and Blackrock Muniholdings Closed, you can compare the effects of market volatilities on BNY Mellon 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 BNY Mellon with a short position of Blackrock Muniholdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of BNY Mellon and Blackrock Muniholdings.

Diversification Opportunities for BNY Mellon and Blackrock Muniholdings

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between BNY and Blackrock is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding BNY Mellon Strategic and Blackrock Muniholdings Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings and BNY Mellon 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 BNY Mellon Strategic 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 BNY Mellon i.e., BNY Mellon and Blackrock Muniholdings go up and down completely randomly.

Pair Corralation between BNY Mellon and Blackrock Muniholdings

Considering the 90-day investment horizon BNY Mellon is expected to generate 1.18 times less return on investment than Blackrock Muniholdings. In addition to that, BNY Mellon is 1.22 times more volatile than Blackrock Muniholdings Closed. It trades about 0.04 of its total potential returns per unit of risk. Blackrock Muniholdings Closed is currently generating about 0.05 per unit of volatility. If you would invest  1,066  in Blackrock Muniholdings Closed on September 13, 2024 and sell it today you would earn a total of  186.00  from holding Blackrock Muniholdings Closed or generate 17.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

BNY Mellon Strategic  vs.  Blackrock Muniholdings Closed

 Performance 
       Timeline  
BNY Mellon Strategic 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BNY Mellon Strategic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, BNY Mellon is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Blackrock Muniholdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Blackrock Muniholdings Closed has generated negative risk-adjusted returns adding no value to fund investors. In spite of rather sound technical indicators, Blackrock Muniholdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

BNY Mellon and Blackrock Muniholdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BNY Mellon and Blackrock Muniholdings

The main advantage of trading using opposite BNY Mellon and Blackrock Muniholdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BNY Mellon 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.
The idea behind BNY Mellon Strategic and Blackrock Muniholdings Closed pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stocks Directory module to find actively traded stocks across global markets.

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