Correlation Between WisdomTree Floating and BlackRock AAA
Can any of the company-specific risk be diversified away by investing in both WisdomTree Floating and BlackRock AAA 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 WisdomTree Floating and BlackRock AAA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WisdomTree Floating Rate and BlackRock AAA CLO, you can compare the effects of market volatilities on WisdomTree Floating and BlackRock AAA 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 WisdomTree Floating with a short position of BlackRock AAA. Check out your portfolio center. Please also check ongoing floating volatility patterns of WisdomTree Floating and BlackRock AAA.
Diversification Opportunities for WisdomTree Floating and BlackRock AAA
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between WisdomTree and BlackRock is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding WisdomTree Floating Rate and BlackRock AAA CLO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock AAA CLO and WisdomTree Floating 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 WisdomTree Floating Rate are associated (or correlated) with BlackRock AAA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock AAA CLO has no effect on the direction of WisdomTree Floating i.e., WisdomTree Floating and BlackRock AAA go up and down completely randomly.
Pair Corralation between WisdomTree Floating and BlackRock AAA
Given the investment horizon of 90 days WisdomTree Floating is expected to generate 1.16 times less return on investment than BlackRock AAA. But when comparing it to its historical volatility, WisdomTree Floating Rate is 3.28 times less risky than BlackRock AAA. It trades about 1.18 of its potential returns per unit of risk. BlackRock AAA CLO is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 5,166 in BlackRock AAA CLO on August 30, 2024 and sell it today you would earn a total of 30.00 from holding BlackRock AAA CLO or generate 0.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
WisdomTree Floating Rate vs. BlackRock AAA CLO
Performance |
| Timeline |
| WisdomTree Floating Rate |
| BlackRock AAA CLO |
WisdomTree Floating and BlackRock AAA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WisdomTree Floating and BlackRock AAA
The main advantage of trading using opposite WisdomTree Floating and BlackRock AAA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WisdomTree Floating position performs unexpectedly, BlackRock AAA 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 AAA will offset losses from the drop in BlackRock AAA's long position.| WisdomTree Floating vs. iShares Treasury Floating | WisdomTree Floating vs. SPDR Bloomberg Investment | WisdomTree Floating vs. iShares 0 3 Month | WisdomTree Floating vs. SPDR Barclays Short |
| BlackRock AAA vs. Janus Detroit Street | BlackRock AAA vs. Janus Detroit Street | BlackRock AAA vs. VanEck ETF Trust | BlackRock AAA vs. Panagram Bbb B Clo |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |