Correlation Between Western Asset and William Blair
Can any of the company-specific risk be diversified away by investing in both Western Asset and William Blair 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 William Blair into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Premier and William Blair Small Mid, you can compare the effects of market volatilities on Western Asset and William Blair 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 William Blair. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and William Blair.
Diversification Opportunities for Western Asset and William Blair
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and William is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Premier and William Blair Small Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on William Blair Small 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 Premier are associated (or correlated) with William Blair. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of William Blair Small has no effect on the direction of Western Asset i.e., Western Asset and William Blair go up and down completely randomly.
Pair Corralation between Western Asset and William Blair
Assuming the 90 days horizon Western Asset is expected to generate 1.95 times less return on investment than William Blair. In addition to that, Western Asset is 1.34 times more volatile than William Blair Small Mid. It trades about 0.02 of its total potential returns per unit of risk. William Blair Small Mid is currently generating about 0.05 per unit of volatility. If you would invest 1,401 in William Blair Small Mid on August 26, 2024 and sell it today you would earn a total of 402.00 from holding William Blair Small Mid or generate 28.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.61% |
| Values | Daily Returns |
Western Asset Premier vs. William Blair Small Mid
Performance |
| Timeline |
| Western Asset Premier |
| William Blair Small |
Western Asset and William Blair Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and William Blair
The main advantage of trading using opposite Western Asset and William Blair positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, William Blair 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 William Blair will offset losses from the drop in William Blair's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| William Blair vs. Praxis Growth Index | William Blair vs. Growth Fund Of | William Blair vs. L Abbett Growth | William Blair vs. Victory Rs Growth |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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