Correlation Between Blackrock Moderate and Taxable Municipal

Can any of the company-specific risk be diversified away by investing in both Blackrock Moderate and Taxable 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 Moderate and Taxable Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blackrock Moderate Prepared and Taxable Municipal Bond, you can compare the effects of market volatilities on Blackrock Moderate and Taxable 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 Moderate with a short position of Taxable Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Moderate and Taxable Municipal.

Diversification Opportunities for Blackrock Moderate and Taxable Municipal

0.21

Correlation Coefficient

Blackrock Moderate  Taxable Municipal

Modest diversification

The 3 months correlation between Blackrock and Taxable is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Moderate Prepared and Taxable Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taxable Municipal Bond and Blackrock Moderate 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 Moderate Prepared are associated (or correlated) with Taxable Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taxable Municipal Bond has no effect on the direction of Blackrock Moderate i.e., Blackrock Moderate and Taxable Municipal go up and down completely randomly.

Pair Corralation between Blackrock Moderate and Taxable Municipal

Assuming the 90 days horizon Blackrock Moderate Prepared is expected to generate 0.69 times more return on investment than Taxable Municipal. However, Blackrock Moderate Prepared is 1.45 times less risky than Taxable Municipal. It trades about 0.08 of its potential returns per unit of risk. Taxable Municipal Bond is currently generating about 0.01 per unit of risk. If you would invest  1,338  in Blackrock Moderate Prepared on September 13, 2024 and sell it today you would earn a total of  15.00  from holding Blackrock Moderate Prepared or generate 1.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

Blackrock Moderate Prepared  vs.  Taxable Municipal Bond

Blackrock Moderate

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Moderate Prepared are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Taxable Municipal Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taxable Municipal Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Taxable Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Moderate and Taxable Municipal

The main advantage of trading using opposite Blackrock Moderate and Taxable Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Moderate position performs unexpectedly, Taxable 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 Taxable Municipal will offset losses from the drop in Taxable Municipal's long position.

The idea behind Blackrock Moderate Prepared and Taxable Municipal Bond 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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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.