Correlation Between Western Asset and Blackrock Muni
Can any of the company-specific risk be diversified away by investing in both Western Asset and Blackrock Muni 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 Muni into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Managed and Blackrock Muni Intermediate, you can compare the effects of market volatilities on Western Asset and Blackrock Muni 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 Muni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Blackrock Muni.
Diversification Opportunities for Western Asset and Blackrock Muni
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Blackrock is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Blackrock Muni Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Muni Inter 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 Managed are associated (or correlated) with Blackrock Muni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Muni Inter has no effect on the direction of Western Asset i.e., Western Asset and Blackrock Muni go up and down completely randomly.
Pair Corralation between Western Asset and Blackrock Muni
Considering the 90-day investment horizon Western Asset is expected to generate 1.15 times less return on investment than Blackrock Muni. In addition to that, Western Asset is 1.14 times more volatile than Blackrock Muni Intermediate. It trades about 0.09 of its total potential returns per unit of risk. Blackrock Muni Intermediate is currently generating about 0.12 per unit of volatility. If you would invest 1,086 in Blackrock Muni Intermediate on September 4, 2024 and sell it today you would earn a total of 185.00 from holding Blackrock Muni Intermediate or generate 17.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Managed vs. Blackrock Muni Intermediate
Performance |
| Timeline |
| Western Asset Managed |
| Blackrock Muni Inter |
Western Asset and Blackrock Muni Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Blackrock Muni
The main advantage of trading using opposite Western Asset and Blackrock Muni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Blackrock Muni 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 Muni will offset losses from the drop in Blackrock Muni's long position.| Western Asset vs. Blackrock Muni Intermediate | Western Asset vs. Blackrock Muniyield Quality | Western Asset vs. Blackrock Muniyield Quality | Western Asset vs. DTF Tax Free |
| Blackrock Muni vs. Blackrock Muniyield | Blackrock Muni vs. Blackrock Muniyield Quality | Blackrock Muni vs. Blackrock Muniyield Quality | Blackrock Muni vs. Blackrock Muniholdings Quality |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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