Correlation Between Blackrock Muniyield and Altisource Asset

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

By analyzing existing cross correlation between Blackrock Muniyield and Altisource Asset Management, you can compare the effects of market volatilities on Blackrock Muniyield and Altisource Asset 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 Altisource Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Muniyield and Altisource Asset.

Diversification Opportunities for Blackrock Muniyield and Altisource Asset

0.11

Correlation Coefficient

Blackrock Muniyield  Altisource Asset

Average diversification

The 3 months correlation between Blackrock and Altisource is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield and Altisource Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altisource Asset Man 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 are associated (or correlated) with Altisource Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altisource Asset Man has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and Altisource Asset go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and Altisource Asset

Considering the 90-day investment horizon Blackrock Muniyield is expected to generate 19.29 times less return on investment than Altisource Asset. But when comparing it to its historical volatility, Blackrock Muniyield is 11.23 times less risky than Altisource Asset. It trades about 0.02 of its potential returns per unit of risk. Altisource Asset Management is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  601.00  in Altisource Asset Management on February 5, 2024 and sell it today you would lose (280.00) from holding Altisource Asset Management or give up 46.59% of portfolio value over 90 days.

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

Blackrock Muniyield  vs.  Altisource Asset Management

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Altisource Asset Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altisource Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Blackrock Muniyield and Altisource Asset

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

The idea behind Blackrock Muniyield and Altisource Asset Management 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.