Correlation Between Blackrock Muniyield and Liberty All
Can any of the company-specific risk be diversified away by investing in both Blackrock Muniyield and Liberty All 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 Liberty All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Muniyield Quality and Liberty All Star, you can compare the effects of market volatilities on Blackrock Muniyield and Liberty All 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 Liberty All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniyield and Liberty All.
Diversification Opportunities for Blackrock Muniyield and Liberty All
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Blackrock and Liberty is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield Quality and Liberty All Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liberty All Star 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 Quality are associated (or correlated) with Liberty All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liberty All Star has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and Liberty All go up and down completely randomly.
Pair Corralation between Blackrock Muniyield and Liberty All
Considering the 90-day investment horizon Blackrock Muniyield Quality is expected to generate 0.47 times more return on investment than Liberty All. However, Blackrock Muniyield Quality is 2.12 times less risky than Liberty All. It trades about -0.05 of its potential returns per unit of risk. Liberty All Star is currently generating about -0.07 per unit of risk. If you would invest 1,108 in Blackrock Muniyield Quality on January 14, 2025 and sell it today you would lose (55.00) from holding Blackrock Muniyield Quality or give up 4.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Muniyield Quality vs. Liberty All Star
Performance |
| Timeline |
| Blackrock Muniyield |
| Liberty All Star |
Blackrock Muniyield and Liberty All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Muniyield and Liberty All
The main advantage of trading using opposite Blackrock Muniyield and Liberty All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniyield position performs unexpectedly, Liberty All 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 Liberty All will offset losses from the drop in Liberty All's long position.The idea behind Blackrock Muniyield Quality and Liberty All Star 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.
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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