Correlation Between Blackrock and California Municipal
Can any of the company-specific risk be diversified away by investing in both Blackrock and California Municipal 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 and California Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Sm Cap and California Municipal Fund, you can compare the effects of market volatilities on Blackrock and California Municipal 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 with a short position of California Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock and California Municipal.
Diversification Opportunities for Blackrock and California Municipal
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Blackrock and California is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Sm Cap and California Municipal Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Municipal and Blackrock 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 Sm Cap are associated (or correlated) with California Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Municipal has no effect on the direction of Blackrock i.e., Blackrock and California Municipal go up and down completely randomly.
Pair Corralation between Blackrock and California Municipal
Assuming the 90 days horizon Blackrock Sm Cap is expected to generate 8.22 times more return on investment than California Municipal. However, Blackrock is 8.22 times more volatile than California Municipal Fund. It trades about 0.04 of its potential returns per unit of risk. California Municipal Fund is currently generating about 0.08 per unit of risk. If you would invest 2,282 in Blackrock Sm Cap on September 14, 2024 and sell it today you would earn a total of 302.00 from holding Blackrock Sm Cap or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Blackrock Sm Cap vs. California Municipal Fund
Performance |
| Timeline |
| Blackrock Sm Cap |
| California Municipal |
Blackrock and California Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock and California Municipal
The main advantage of trading using opposite Blackrock and California Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock position performs unexpectedly, California Municipal 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 California Municipal will offset losses from the drop in California Municipal's long position.| Blackrock vs. Blackrock Intern Index | Blackrock vs. Blackrock Sp 500 | Blackrock vs. Blackrock Bond Index | Blackrock vs. Blackrock Small Cap |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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