Correlation Between Blackrock Debt and Nuveen Municipal

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

By analyzing existing cross correlation between Blackrock Debt Strategies and Nuveen Municipal Credit, you can compare the effects of market volatilities on Blackrock Debt and Nuveen Municipal 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 Debt with a short position of Nuveen Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Debt and Nuveen Municipal.

Diversification Opportunities for Blackrock Debt and Nuveen Municipal

0.62

Correlation Coefficient

Blackrock Debt  Nuveen Municipal

Poor diversification

The 3 months correlation between Blackrock and Nuveen is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Debt Strategies and Nuveen Municipal Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Municipal Credit and Blackrock Debt 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 Debt Strategies are associated (or correlated) with Nuveen Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Municipal Credit has no effect on the direction of Blackrock Debt i.e., Blackrock Debt and Nuveen Municipal go up and down completely randomly.

Pair Corralation between Blackrock Debt and Nuveen Municipal

Considering the 90-day investment horizon Blackrock Debt Strategies is expected to generate 1.94 times more return on investment than Nuveen Municipal. However, Blackrock Debt is 1.94 times more volatile than Nuveen Municipal Credit. It trades about -0.11 of its potential returns per unit of risk. Nuveen Municipal Credit is currently generating about -0.26 per unit of risk. If you would invest  1,096  in Blackrock Debt Strategies on January 30, 2024 and sell it today you would lose (26.00) from holding Blackrock Debt Strategies or give up 2.37% of portfolio value over 90 days.

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

Blackrock Debt Strategies  vs.  Nuveen Municipal Credit

Blackrock Debt Strategies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock Debt Strategies has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable basic indicators, Blackrock Debt is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Nuveen Municipal Credit

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen Municipal Credit are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, Nuveen Municipal 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 Debt and Nuveen Municipal

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

The idea behind Blackrock Debt Strategies and Nuveen Municipal Credit 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.