Correlation Between Metropolitan West and Blackrock Lifepath
Can any of the company-specific risk be diversified away by investing in both Metropolitan West and Blackrock Lifepath 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 Metropolitan West and Blackrock Lifepath into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan West High and Blackrock Lifepath Index, you can compare the effects of market volatilities on Metropolitan West and Blackrock Lifepath 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 Metropolitan West with a short position of Blackrock Lifepath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan West and Blackrock Lifepath.
Diversification Opportunities for Metropolitan West and Blackrock Lifepath
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metropolitan and Blackrock is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West High and Blackrock Lifepath Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Lifepath Index and Metropolitan West 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 Metropolitan West High are associated (or correlated) with Blackrock Lifepath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Lifepath Index has no effect on the direction of Metropolitan West i.e., Metropolitan West and Blackrock Lifepath go up and down completely randomly.
Pair Corralation between Metropolitan West and Blackrock Lifepath
Assuming the 90 days horizon Metropolitan West High is expected to under-perform the Blackrock Lifepath. But the mutual fund apears to be less risky and, when comparing its historical volatility, Metropolitan West High is 4.65 times less risky than Blackrock Lifepath. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Blackrock Lifepath Index is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,191 in Blackrock Lifepath Index on September 3, 2024 and sell it today you would earn a total of 66.00 from holding Blackrock Lifepath Index or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan West High vs. Blackrock Lifepath Index
Performance |
| Timeline |
| Metropolitan West High |
| Blackrock Lifepath Index |
Metropolitan West and Blackrock Lifepath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan West and Blackrock Lifepath
The main advantage of trading using opposite Metropolitan West and Blackrock Lifepath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Blackrock Lifepath 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 Lifepath will offset losses from the drop in Blackrock Lifepath's long position.| Metropolitan West vs. Federated Total Return | Metropolitan West vs. Global Bond Fund | Metropolitan West vs. Government Bond Fund | Metropolitan West vs. Aberdeen Global High |
| Blackrock Lifepath vs. Goldman Sachs High | Blackrock Lifepath vs. Artisan High Income | Blackrock Lifepath vs. Metropolitan West High | Blackrock Lifepath vs. Calvert High Yield |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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