Correlation Between Federated Investors and Blackrock Muniyield

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

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

Diversification Opportunities for Federated Investors and Blackrock Muniyield

0.56

Correlation Coefficient

Federated Investors  Blackrock Muniyield

Very weak diversification

The 3 months correlation between Federated and Blackrock is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Federated Investors B and Blackrock Muniyield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniyield and Federated Investors 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 Federated Investors B 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 Federated Investors i.e., Federated Investors and Blackrock Muniyield go up and down completely randomly.

Pair Corralation between Federated Investors and Blackrock Muniyield

Considering the 90-day investment horizon Federated Investors B is expected to under-perform the Blackrock Muniyield. In addition to that, Federated Investors is 2.08 times more volatile than Blackrock Muniyield. It trades about -0.09 of its total potential returns per unit of risk. Blackrock Muniyield is currently generating about 0.05 per unit of volatility. If you would invest  1,053  in Blackrock Muniyield on February 4, 2024 and sell it today you would earn a total of  16.00  from holding Blackrock Muniyield or generate 1.52% return on investment over 90 days.

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

Federated Investors B  vs.  Blackrock Muniyield

Federated Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Investors B has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Blackrock Muniyield

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Muniyield are ranked lower than 3 (%) 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 Federated Investors and Blackrock Muniyield

The main advantage of trading using opposite Federated Investors and Blackrock Muniyield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Investors 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 Federated Investors B 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.