Correlation Between Blackrock Muni and First Trust
Can any of the company-specific risk be diversified away by investing in both Blackrock Muni and First Trust 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 Muni and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Muni Intermediate and First Trust Enhanced, you can compare the effects of market volatilities on Blackrock Muni and First Trust 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 Muni with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muni and First Trust.
Diversification Opportunities for Blackrock Muni and First Trust
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Blackrock and First is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muni Intermediate and First Trust Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Enhanced and Blackrock Muni 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 Muni Intermediate are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Enhanced has no effect on the direction of Blackrock Muni i.e., Blackrock Muni and First Trust go up and down completely randomly.
Pair Corralation between Blackrock Muni and First Trust
Considering the 90-day investment horizon Blackrock Muni Intermediate is expected to generate 1.16 times more return on investment than First Trust. However, Blackrock Muni is 1.16 times more volatile than First Trust Enhanced. It trades about 0.09 of its potential returns per unit of risk. First Trust Enhanced is currently generating about 0.09 per unit of risk. If you would invest 1,236 in Blackrock Muni Intermediate on August 25, 2024 and sell it today you would earn a total of 20.00 from holding Blackrock Muni Intermediate or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Blackrock Muni Intermediate vs. First Trust Enhanced
Performance |
| Timeline |
| Blackrock Muni Inter |
| First Trust Enhanced |
Blackrock Muni and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Muni and First Trust
The main advantage of trading using opposite Blackrock Muni and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muni position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Blackrock Muni vs. Blackrock Muniyield Quality | Blackrock Muni vs. DTF Tax Free | Blackrock Muni vs. MFS High Yield | Blackrock Muni vs. MFS High Income |
| First Trust vs. Rivernorth Opportunistic Municipalome | First Trust vs. Blackrock Muni Intermediate | First Trust vs. Blackrock Muniholdings Ny | First Trust vs. Nuveen New York |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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