Correlation Between Central Europe and Blackrock Muniholdings

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

By analyzing existing cross correlation between Central Europe Russia and Blackrock Muniholdings Quality, you can compare the effects of market volatilities on Central Europe and Blackrock Muniholdings 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 Central Europe with a short position of Blackrock Muniholdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Europe and Blackrock Muniholdings.

Diversification Opportunities for Central Europe and Blackrock Muniholdings

0.09

Correlation Coefficient

Central Europe  Blackrock Muniholdings

Significant diversification

The 3 months correlation between Central and Blackrock is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Central Europe Russia and Blackrock Muniholdings Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings and Central Europe 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 Central Europe Russia are associated (or correlated) with Blackrock Muniholdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniholdings has no effect on the direction of Central Europe i.e., Central Europe and Blackrock Muniholdings go up and down completely randomly.

Pair Corralation between Central Europe and Blackrock Muniholdings

Considering the 90-day investment horizon Central Europe Russia is expected to generate 3.28 times more return on investment than Blackrock Muniholdings. However, Central Europe is 3.28 times more volatile than Blackrock Muniholdings Quality. It trades about 0.12 of its potential returns per unit of risk. Blackrock Muniholdings Quality is currently generating about 0.13 per unit of risk. If you would invest  1,037  in Central Europe Russia on September 3, 2024 and sell it today you would earn a total of  144.00  from holding Central Europe Russia or generate 13.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Central Europe Russia  vs.  Blackrock Muniholdings Quality

Central Europe Russia

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Central Europe Russia are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather fragile technical and fundamental indicators, Central Europe exhibited solid returns over the last few months and may actually be approaching a breakup point.

Blackrock Muniholdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniholdings Quality are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Blackrock Muniholdings is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Central Europe and Blackrock Muniholdings

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

The idea behind Central Europe Russia and Blackrock Muniholdings Quality 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.