Correlation Between Bny Mellon and Blackrock Muniyield

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

By analyzing existing cross correlation between Bny Mellon Municipalome and Blackrock Muniyield, you can compare the effects of market volatilities on Bny Mellon and Blackrock Muniyield 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 Bny Mellon with a short position of Blackrock Muniyield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bny Mellon and Blackrock Muniyield.

Diversification Opportunities for Bny Mellon and Blackrock Muniyield

0.69

Correlation Coefficient

Bny Mellon  Blackrock Muniyield

Poor diversification

The 3 months correlation between Bny and Blackrock is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Municipalome and Blackrock Muniyield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and Bny Mellon 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 Bny Mellon Municipalome are associated (or correlated) with Blackrock Muniyield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniyield has no effect on the direction of Bny Mellon i.e., Bny Mellon and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Bny Mellon and Blackrock Muniyield

Considering the 90-day investment horizon Bny Mellon is expected to generate 1.3 times less return on investment than Blackrock Muniyield. But when comparing it to its historical volatility, Bny Mellon Municipalome is 1.04 times less risky than Blackrock Muniyield. It trades about 0.07 of its potential returns per unit of risk. Blackrock Muniyield is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,106  in Blackrock Muniyield on September 1, 2024 and sell it today you would earn a total of  38.00  from holding Blackrock Muniyield or generate 3.44% return on investment over 90 days.

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

Bny Mellon Municipalome  vs.  Blackrock Muniyield

Bny Mellon Municipalome

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Municipalome are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Bny Mellon is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Blackrock Muniyield

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniyield are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Blackrock Muniyield is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bny Mellon and Blackrock Muniyield

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

The idea behind Bny Mellon Municipalome and Blackrock Muniyield 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.