Correlation Between IShares Core and Western Asset
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Total and Western Asset Total, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Western Asset.
Diversification Opportunities for IShares Core and Western Asset
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Western is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Total and Western Asset Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Total and IShares Core 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 iShares Core Total 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 Total has no effect on the direction of IShares Core i.e., IShares Core and Western Asset go up and down completely randomly.
Pair Corralation between IShares Core and Western Asset
Given the investment horizon of 90 days iShares Core Total is expected to generate 0.78 times more return on investment than Western Asset. However, iShares Core Total is 1.28 times less risky than Western Asset. It trades about 0.12 of its potential returns per unit of risk. Western Asset Total is currently generating about 0.08 per unit of risk. If you would invest 4,508 in iShares Core Total on October 23, 2024 and sell it today you would earn a total of 27.00 from holding iShares Core Total or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Total vs. Western Asset Total
Performance |
| Timeline |
| iShares Core Total |
| Western Asset Total |
IShares Core and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Western Asset
The main advantage of trading using opposite IShares Core and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. iShares Core 1 5 | IShares Core vs. iShares Core International | IShares Core vs. iShares Treasury Bond | IShares Core vs. iShares 1 5 Year |
| Western Asset vs. Western Asset Short | Western Asset vs. iShares ESG USD | Western Asset vs. VictoryShares Multi Factor Minimum | Western Asset vs. ClearBridge Dividend Strategy |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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