Correlation Between Blackrock Muniyield and DWS Municipal
Can any of the company-specific risk be diversified away by investing in both Blackrock Muniyield and DWS Municipal 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 DWS Municipal 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 DWS Municipal Income, you can compare the effects of market volatilities on Blackrock Muniyield and DWS Municipal 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 DWS Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniyield and DWS Municipal.
Diversification Opportunities for Blackrock Muniyield and DWS Municipal
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Blackrock and DWS is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield Quality and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income 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 DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and DWS Municipal go up and down completely randomly.
Pair Corralation between Blackrock Muniyield and DWS Municipal
Considering the 90-day investment horizon Blackrock Muniyield is expected to generate 1.58 times less return on investment than DWS Municipal. But when comparing it to its historical volatility, Blackrock Muniyield Quality is 1.01 times less risky than DWS Municipal. It trades about 0.1 of its potential returns per unit of risk. DWS Municipal Income is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 901.00 in DWS Municipal Income on August 24, 2024 and sell it today you would earn a total of 89.00 from holding DWS Municipal Income or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Blackrock Muniyield Quality vs. DWS Municipal Income
Performance |
| Timeline |
| Blackrock Muniyield |
| DWS Municipal Income |
Blackrock Muniyield and DWS Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Muniyield and DWS Municipal
The main advantage of trading using opposite Blackrock Muniyield and DWS Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniyield position performs unexpectedly, DWS Municipal 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 DWS Municipal will offset losses from the drop in DWS Municipal's long position.| Blackrock Muniyield vs. Tekla Healthcare Investors | Blackrock Muniyield vs. Blackrock Enhanced Capital | Blackrock Muniyield vs. Tekla Life Sciences | Blackrock Muniyield vs. Nuveen New York |
| DWS Municipal vs. Pioneer Floating Rate | DWS Municipal vs. The Gabelli Equity | DWS Municipal vs. Pioneer Municipal High | DWS Municipal vs. Nuveen Global High |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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