Correlation Between Blackrock Muniyield and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both Blackrock Muniyield and Diamond Hill 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 Muniyield and Diamond Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Muniyield and Diamond Hill Investment, you can compare the effects of market volatilities on Blackrock Muniyield and Diamond Hill 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 Muniyield with a short position of Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniyield and Diamond Hill.
Diversification Opportunities for Blackrock Muniyield and Diamond Hill
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between BlackRock and Diamond is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield and Diamond Hill Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Investment and Blackrock Muniyield 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 Muniyield are associated (or correlated) with Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Investment has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and Diamond Hill go up and down completely randomly.
Pair Corralation between Blackrock Muniyield and Diamond Hill
Considering the 90-day investment horizon Blackrock Muniyield is expected to generate 1.47 times less return on investment than Diamond Hill. But when comparing it to its historical volatility, Blackrock Muniyield is 2.84 times less risky than Diamond Hill. It trades about 0.14 of its potential returns per unit of risk. Diamond Hill Investment is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 14,586 in Diamond Hill Investment on August 29, 2024 and sell it today you would earn a total of 2,041 from holding Diamond Hill Investment or generate 13.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Muniyield vs. Diamond Hill Investment
Performance |
| Timeline |
| Blackrock Muniyield |
| Diamond Hill Investment |
Blackrock Muniyield and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Muniyield and Diamond Hill
The main advantage of trading using opposite Blackrock Muniyield and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniyield position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.The idea behind Blackrock Muniyield and Diamond Hill Investment 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.
| Diamond Hill vs. Federated Premier Municipal | Diamond Hill vs. Blackrock Muniyield | Diamond Hill vs. NXG NextGen Infrastructure | Diamond Hill vs. Federated Investors B |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |