Correlation Between Western Asset and Blackrock Muniholdings
Can any of the company-specific risk be diversified away by investing in both Western Asset and Blackrock Muniholdings 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 Western Asset and Blackrock Muniholdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Blackrock Muniholdings Closed, you can compare the effects of market volatilities on Western Asset and Blackrock Muniholdings 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 Western Asset with a short position of Blackrock Muniholdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Blackrock Muniholdings.
Diversification Opportunities for Western Asset and Blackrock Muniholdings
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Blackrock is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Blackrock Muniholdings Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muniholdings and Western Asset 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 Western Asset Municipal are associated (or correlated) with Blackrock Muniholdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muniholdings has no effect on the direction of Western Asset i.e., Western Asset and Blackrock Muniholdings go up and down completely randomly.
Pair Corralation between Western Asset and Blackrock Muniholdings
Considering the 90-day investment horizon Western Asset Municipal is expected to generate 1.05 times more return on investment than Blackrock Muniholdings. However, Western Asset is 1.05 times more volatile than Blackrock Muniholdings Closed. It trades about 0.08 of its potential returns per unit of risk. Blackrock Muniholdings Closed is currently generating about 0.03 per unit of risk. If you would invest 684.00 in Western Asset Municipal on November 1, 2024 and sell it today you would earn a total of 26.00 from holding Western Asset Municipal or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Blackrock Muniholdings Closed
Performance |
| Timeline |
| Western Asset Municipal |
| Blackrock Muniholdings |
Western Asset and Blackrock Muniholdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Blackrock Muniholdings
The main advantage of trading using opposite Western Asset and Blackrock Muniholdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Blackrock Muniholdings 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 Blackrock Muniholdings will offset losses from the drop in Blackrock Muniholdings' long position.| Western Asset vs. Western Asset Managed | Western Asset vs. Blackrock Muniholdings Quality | Western Asset vs. DTF Tax Free | Western Asset vs. John Hancock Income |
| Blackrock Muniholdings vs. John Hancock Income | Blackrock Muniholdings vs. MFS High Income | Blackrock Muniholdings vs. MFS Investment Grade | Blackrock Muniholdings vs. DTF Tax Free |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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