Correlation Between Blackrock National and Vanguard Intermediate-ter

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

By analyzing existing cross correlation between Blackrock National Municipal and Vanguard Intermediate Term Tax Exempt, you can compare the effects of market volatilities on Blackrock National and Vanguard Intermediate-ter 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 National with a short position of Vanguard Intermediate-ter. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock National and Vanguard Intermediate-ter.

Diversification Opportunities for Blackrock National and Vanguard Intermediate-ter

0.9

Correlation Coefficient

Blackrock National  Vanguard Intermediate-ter

Almost no diversification

The 3 months correlation between Blackrock and Vanguard is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock National Municipal and Vanguard Intermediate Term Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Intermediate-ter and Blackrock National 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 National Municipal are associated (or correlated) with Vanguard Intermediate-ter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Intermediate-ter has no effect on the direction of Blackrock National i.e., Blackrock National and Vanguard Intermediate-ter go up and down completely randomly.

Pair Corralation between Blackrock National and Vanguard Intermediate-ter

Assuming the 90 days horizon Blackrock National Municipal is expected to generate 1.05 times more return on investment than Vanguard Intermediate-ter. However, Blackrock National is 1.05 times more volatile than Vanguard Intermediate Term Tax Exempt. It trades about 0.06 of its potential returns per unit of risk. Vanguard Intermediate Term Tax Exempt is currently generating about 0.05 per unit of risk. If you would invest  1,014  in Blackrock National Municipal on September 4, 2024 and sell it today you would earn a total of  8.00  from holding Blackrock National Municipal or generate 0.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Blackrock National Municipal  vs.  Vanguard Intermediate Term Tax

Blackrock National

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock National Municipal are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Blackrock National is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Vanguard Intermediate-ter

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Intermediate Term Tax Exempt are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Vanguard Intermediate-ter 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 National and Vanguard Intermediate-ter

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

The idea behind Blackrock National Municipal and Vanguard Intermediate Term Tax Exempt 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.