Correlation Between Blackrock Muniyield and Virtus Dividend
Can any of the company-specific risk be diversified away by investing in both Blackrock Muniyield and Virtus Dividend 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 Virtus Dividend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Muniyield and Virtus Dividend Interest, you can compare the effects of market volatilities on Blackrock Muniyield and Virtus Dividend 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 Virtus Dividend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniyield and Virtus Dividend.
Diversification Opportunities for Blackrock Muniyield and Virtus Dividend
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Blackrock and Virtus is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield and Virtus Dividend Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Dividend Interest 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 Virtus Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Dividend Interest has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and Virtus Dividend go up and down completely randomly.
Pair Corralation between Blackrock Muniyield and Virtus Dividend
Considering the 90-day investment horizon Blackrock Muniyield is expected to generate 1.27 times less return on investment than Virtus Dividend. But when comparing it to its historical volatility, Blackrock Muniyield is 1.25 times less risky than Virtus Dividend. It trades about 0.07 of its potential returns per unit of risk. Virtus Dividend Interest is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,096 in Virtus Dividend Interest on August 28, 2024 and sell it today you would earn a total of 213.00 from holding Virtus Dividend Interest or generate 19.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Muniyield vs. Virtus Dividend Interest
Performance |
| Timeline |
| Blackrock Muniyield |
| Virtus Dividend Interest |
Blackrock Muniyield and Virtus Dividend Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Muniyield and Virtus Dividend
The main advantage of trading using opposite Blackrock Muniyield and Virtus Dividend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniyield position performs unexpectedly, Virtus Dividend 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 Virtus Dividend will offset losses from the drop in Virtus Dividend's long position.The idea behind Blackrock Muniyield and Virtus Dividend Interest 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.
| Virtus Dividend vs. Eaton Vance Risk | Virtus Dividend vs. Blackrock Muniholdings Closed | Virtus Dividend vs. DTF Tax Free | Virtus Dividend vs. Eaton Vance Floating |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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