Correlation Between Municipal Bond and Blackrock Inflation
Can any of the company-specific risk be diversified away by investing in both Municipal Bond and Blackrock Inflation 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 Municipal Bond and Blackrock Inflation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Municipal Bond Portfolio and Blackrock Inflation Protected, you can compare the effects of market volatilities on Municipal Bond and Blackrock Inflation 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 Municipal Bond with a short position of Blackrock Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Municipal Bond and Blackrock Inflation.
Diversification Opportunities for Municipal Bond and Blackrock Inflation
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Municipal and Blackrock is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Municipal Bond Portfolio and Blackrock Inflation Protected in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Inflation and Municipal Bond 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 Municipal Bond Portfolio are associated (or correlated) with Blackrock Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Inflation has no effect on the direction of Municipal Bond i.e., Municipal Bond and Blackrock Inflation go up and down completely randomly.
Pair Corralation between Municipal Bond and Blackrock Inflation
Assuming the 90 days horizon Municipal Bond Portfolio is expected to generate 0.78 times more return on investment than Blackrock Inflation. However, Municipal Bond Portfolio is 1.28 times less risky than Blackrock Inflation. It trades about 0.12 of its potential returns per unit of risk. Blackrock Inflation Protected is currently generating about 0.02 per unit of risk. If you would invest 865.00 in Municipal Bond Portfolio on August 29, 2024 and sell it today you would earn a total of 5.00 from holding Municipal Bond Portfolio or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Municipal Bond Portfolio vs. Blackrock Inflation Protected
Performance |
| Timeline |
| Municipal Bond Portfolio |
| Blackrock Inflation |
Municipal Bond and Blackrock Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Municipal Bond and Blackrock Inflation
The main advantage of trading using opposite Municipal Bond and Blackrock Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Municipal Bond position performs unexpectedly, Blackrock Inflation 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 Blackrock Inflation will offset losses from the drop in Blackrock Inflation's long position.| Municipal Bond vs. Blackrock Inflation Protected | Municipal Bond vs. Oklahoma College Savings | Municipal Bond vs. Ab Municipal Bond | Municipal Bond vs. Western Asset Inflation |
| Blackrock Inflation vs. Vanguard Inflation Protected Securities | Blackrock Inflation vs. American Funds Inflation | Blackrock Inflation vs. HUMANA INC | Blackrock Inflation vs. Aquagold International |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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