Correlation Between XAI Octagon and Blackrock Muniyield

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

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

Diversification Opportunities for XAI Octagon and Blackrock Muniyield

-0.29

Correlation Coefficient

XAI Octagon  Blackrock Muniyield

Very good diversification

The 3 months correlation between XAI and Blackrock is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding XAI Octagon Floating and Blackrock Muniyield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and XAI Octagon 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 XAI Octagon Floating 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 XAI Octagon i.e., XAI Octagon and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between XAI Octagon and Blackrock Muniyield

Given the investment horizon of 90 days XAI Octagon Floating is expected to generate 0.48 times more return on investment than Blackrock Muniyield. However, XAI Octagon Floating is 2.1 times less risky than Blackrock Muniyield. It trades about 0.3 of its potential returns per unit of risk. Blackrock Muniyield is currently generating about 0.08 per unit of risk. If you would invest  664.00  in XAI Octagon Floating on September 3, 2024 and sell it today you would earn a total of  41.00  from holding XAI Octagon Floating or generate 6.17% return on investment over 90 days.

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

XAI Octagon Floating  vs.  Blackrock Muniyield

XAI Octagon Floating

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in XAI Octagon Floating are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, XAI Octagon is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 XAI Octagon and Blackrock Muniyield

The main advantage of trading using opposite XAI Octagon and Blackrock Muniyield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XAI Octagon 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 XAI Octagon Floating 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.