Correlation Between Blackrock Muniyield and Munivest Fund

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

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

Diversification Opportunities for Blackrock Muniyield and Munivest Fund

0.88

Correlation Coefficient

Blackrock Muniyield  Munivest Fund

Very poor diversification

The 3 months correlation between Blackrock and Munivest is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield Quality and Munivest Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Munivest Fund and Blackrock Muniyield 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 Muniyield Quality are associated (or correlated) with Munivest Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Munivest Fund has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and Munivest Fund go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and Munivest Fund

Considering the 90-day investment horizon Blackrock Muniyield is expected to generate 1.08 times less return on investment than Munivest Fund. But when comparing it to its historical volatility, Blackrock Muniyield Quality is 1.1 times less risky than Munivest Fund. It trades about 0.06 of its potential returns per unit of risk. Munivest Fund is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  732.00  in Munivest Fund on September 1, 2024 and sell it today you would earn a total of  17.00  from holding Munivest Fund or generate 2.32% return on investment over 90 days.

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

Blackrock Muniyield Quality  vs.  Munivest Fund

Blackrock Muniyield

Risk-Adjusted Performance

4 of 100

Insignificant

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

Munivest Fund

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Munivest Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Munivest Fund is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Blackrock Muniyield and Munivest Fund

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

The idea behind Blackrock Muniyield Quality and Munivest Fund 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.