Correlation Between Blackrock Muniholdings and Southern Michigan
Can any of the company-specific risk be diversified away by investing in both Blackrock Muniholdings and Southern Michigan 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 Muniholdings and Southern Michigan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Muniholdings Ny and Southern Michigan Bancorp, you can compare the effects of market volatilities on Blackrock Muniholdings and Southern Michigan 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 Muniholdings with a short position of Southern Michigan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniholdings and Southern Michigan.
Diversification Opportunities for Blackrock Muniholdings and Southern Michigan
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Blackrock and Southern is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Ny and Southern Michigan Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Michigan Bancorp and Blackrock Muniholdings 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 Muniholdings Ny are associated (or correlated) with Southern Michigan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Michigan Bancorp has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and Southern Michigan go up and down completely randomly.
Pair Corralation between Blackrock Muniholdings and Southern Michigan
Considering the 90-day investment horizon Blackrock Muniholdings is expected to generate 2.64 times less return on investment than Southern Michigan. But when comparing it to its historical volatility, Blackrock Muniholdings Ny is 1.2 times less risky than Southern Michigan. It trades about 0.19 of its potential returns per unit of risk. Southern Michigan Bancorp is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 1,745 in Southern Michigan Bancorp on August 29, 2024 and sell it today you would earn a total of 130.00 from holding Southern Michigan Bancorp or generate 7.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Muniholdings Ny vs. Southern Michigan Bancorp
Performance |
| Timeline |
| Blackrock Muniholdings |
| Southern Michigan Bancorp |
Blackrock Muniholdings and Southern Michigan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Muniholdings and Southern Michigan
The main advantage of trading using opposite Blackrock Muniholdings and Southern Michigan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniholdings position performs unexpectedly, Southern Michigan 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 Southern Michigan will offset losses from the drop in Southern Michigan's long position.| Blackrock Muniholdings vs. Eaton Vance National | Blackrock Muniholdings vs. Invesco High Income | Blackrock Muniholdings vs. Nuveen California Select | Blackrock Muniholdings vs. MFS Investment Grade |
| Southern Michigan vs. Invesco High Income | Southern Michigan vs. Blackrock Muniholdings Ny | Southern Michigan vs. Nuveen California Select | Southern Michigan vs. MFS Investment Grade |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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