Correlation Between Blackrock Munivest and DWS Municipal

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

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

Diversification Opportunities for Blackrock Munivest and DWS Municipal

0.95

Correlation Coefficient

Blackrock Munivest  DWS Municipal

Almost no diversification

The 3 months correlation between Blackrock and DWS is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Munivest and DWS Municipal Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS Municipal Income and Blackrock Munivest 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 Munivest are associated (or correlated) with DWS Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS Municipal Income has no effect on the direction of Blackrock Munivest i.e., Blackrock Munivest and DWS Municipal go up and down completely randomly.

Pair Corralation between Blackrock Munivest and DWS Municipal

Considering the 90-day investment horizon Blackrock Munivest is expected to generate 1.29 times less return on investment than DWS Municipal. In addition to that, Blackrock Munivest is 1.61 times more volatile than DWS Municipal Income. It trades about 0.15 of its total potential returns per unit of risk. DWS Municipal Income is currently generating about 0.31 per unit of volatility. If you would invest  973.00  in DWS Municipal Income on July 3, 2024 and sell it today you would earn a total of  24.00  from holding DWS Municipal Income or generate 2.47% return on investment over 90 days.

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

Blackrock Munivest  vs.  DWS Municipal Income

Blackrock Munivest

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Munivest are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Blackrock Munivest is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

DWS Municipal Income

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DWS Municipal Income are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, DWS Municipal may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Blackrock Munivest and DWS Municipal

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

The idea behind Blackrock Munivest and DWS Municipal Income 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.