Correlation Between Bridge Builder and Western Asset
Can any of the company-specific risk be diversified away by investing in both Bridge Builder and Western 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 Bridge Builder and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bridge Builder International and Western Asset Municipal, you can compare the effects of market volatilities on Bridge Builder and Western 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 Bridge Builder with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridge Builder and Western Asset.
Diversification Opportunities for Bridge Builder and Western Asset
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bridge and Western is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bridge Builder International and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and Bridge Builder 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 Bridge Builder International are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Municipal has no effect on the direction of Bridge Builder i.e., Bridge Builder and Western Asset go up and down completely randomly.
Pair Corralation between Bridge Builder and Western Asset
Assuming the 90 days horizon Bridge Builder International is expected to generate 3.14 times more return on investment than Western Asset. However, Bridge Builder is 3.14 times more volatile than Western Asset Municipal. It trades about 0.04 of its potential returns per unit of risk. Western Asset Municipal is currently generating about -0.04 per unit of risk. If you would invest 1,243 in Bridge Builder International on December 4, 2024 and sell it today you would earn a total of 91.00 from holding Bridge Builder International or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bridge Builder International vs. Western Asset Municipal
Performance |
| Timeline |
| Bridge Builder Inter |
| Western Asset Municipal |
Bridge Builder and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bridge Builder and Western Asset
The main advantage of trading using opposite Bridge Builder and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bridge Builder position performs unexpectedly, Western 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 Western Asset will offset losses from the drop in Western Asset's long position.| Bridge Builder vs. Templeton Developing Markets | Bridge Builder vs. Franklin Federal Limited Term | Bridge Builder vs. Aqr Sustainable Long Short | Bridge Builder vs. Doubleline Emerging Markets |
| Western Asset vs. Doubleline Emerging Markets | Western Asset vs. Massmutual Premier Diversified | Western Asset vs. Angel Oak Ultrashort | Western Asset vs. Aqr Sustainable Long Short |
Check out your portfolio center.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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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