Correlation Between Blackrock Health and Western Asset
Can any of the company-specific risk be diversified away by investing in both Blackrock Health 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 Blackrock Health and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Blackrock Health Sciences and Western Asset Municipal, you can compare the effects of market volatilities on Blackrock Health 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 Blackrock Health with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Health and Western Asset.
Diversification Opportunities for Blackrock Health and Western Asset
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Blackrock and Western is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Health Sciences 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 Blackrock Health 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 Health Sciences 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 Blackrock Health i.e., Blackrock Health and Western Asset go up and down completely randomly.
Pair Corralation between Blackrock Health and Western Asset
Assuming the 90 days horizon Blackrock Health Sciences is expected to generate 2.74 times more return on investment than Western Asset. However, Blackrock Health is 2.74 times more volatile than Western Asset Municipal. It trades about 0.01 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.02 per unit of risk. If you would invest 6,460 in Blackrock Health Sciences on August 24, 2024 and sell it today you would earn a total of 128.00 from holding Blackrock Health Sciences or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Blackrock Health Sciences vs. Western Asset Municipal
Performance |
| Timeline |
| Blackrock Health Sciences |
| Western Asset Municipal |
Blackrock Health and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Blackrock Health and Western Asset
The main advantage of trading using opposite Blackrock Health and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Health 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.| Blackrock Health vs. Vy T Rowe | Blackrock Health vs. Eaton Vance Atlanta | Blackrock Health vs. Columbia Seligman Global | Blackrock Health vs. Blackrock Health Sciences |
| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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