Correlation Between Blackrock Muniyield and T Rowe

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

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

Diversification Opportunities for Blackrock Muniyield and T Rowe

0.48

Correlation Coefficient

Blackrock Muniyield  T Rowe

Very weak diversification

The 3 months correlation between Blackrock and TROW is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Muniyield and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Blackrock Muniyield i.e., Blackrock Muniyield and T Rowe go up and down completely randomly.

Pair Corralation between Blackrock Muniyield and T Rowe

Considering the 90-day investment horizon Blackrock Muniyield is expected to under-perform the T Rowe. But the fund apears to be less risky and, when comparing its historical volatility, Blackrock Muniyield is 3.09 times less risky than T Rowe. The fund trades about -0.15 of its potential returns per unit of risk. The T Rowe Price is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  11,577  in T Rowe Price on February 5, 2024 and sell it today you would lose (427.00) from holding T Rowe Price or give up 3.69% of portfolio value over 90 days.

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

Blackrock Muniyield  vs.  T Rowe Price

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.

T Rowe Price

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T Rowe Price are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, T Rowe is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Blackrock Muniyield and T Rowe

The main advantage of trading using opposite Blackrock Muniyield and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Muniyield position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.

The idea behind Blackrock Muniyield and T Rowe Price 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.