Correlation Between Blackrock Muniholdings and First Trust

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

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

Diversification Opportunities for Blackrock Muniholdings and First Trust

-0.05

Correlation Coefficient

Blackrock Muniholdings  First Trust

Good diversification

The 3 months correlation between Blackrock and First is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniholdings Ny and First Trust Enhanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Enhanced and Blackrock Muniholdings 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 Muniholdings Ny are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Enhanced has no effect on the direction of Blackrock Muniholdings i.e., Blackrock Muniholdings and First Trust go up and down completely randomly.

Pair Corralation between Blackrock Muniholdings and First Trust

Considering the 90-day investment horizon Blackrock Muniholdings Ny is expected to under-perform the First Trust. But the fund apears to be less risky and, when comparing its historical volatility, Blackrock Muniholdings Ny is 1.05 times less risky than First Trust. The fund trades about -0.06 of its potential returns per unit of risk. The First Trust Enhanced is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,981  in First Trust Enhanced on September 15, 2024 and sell it today you would earn a total of  119.00  from holding First Trust Enhanced or generate 6.01% return on investment over 90 days.

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

Blackrock Muniholdings Ny  vs.  First Trust Enhanced

Blackrock Muniholdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Muniholdings Ny has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical indicators, Blackrock Muniholdings is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

First Trust Enhanced

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Trust Enhanced are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, First Trust is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blackrock Muniholdings and First Trust

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

The idea behind Blackrock Muniholdings Ny and First Trust Enhanced 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.