Correlation Between Western Asset and Blackrock Taxable
Can any of the company-specific risk be diversified away by investing in both Western Asset and Blackrock Taxable 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 Taxable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Blackrock Taxable Municipal, you can compare the effects of market volatilities on Western Asset and Blackrock Taxable 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 Taxable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Blackrock Taxable.
Diversification Opportunities for Western Asset and Blackrock Taxable
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Blackrock is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Blackrock Taxable Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Taxable 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 Diversified are associated (or correlated) with Blackrock Taxable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Taxable has no effect on the direction of Western Asset i.e., Western Asset and Blackrock Taxable go up and down completely randomly.
Pair Corralation between Western Asset and Blackrock Taxable
Considering the 90-day investment horizon Western Asset is expected to generate 5.12 times less return on investment than Blackrock Taxable. But when comparing it to its historical volatility, Western Asset Diversified is 1.34 times less risky than Blackrock Taxable. It trades about 0.05 of its potential returns per unit of risk. Blackrock Taxable Municipal is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,644 in Blackrock Taxable Municipal on August 31, 2024 and sell it today you would earn a total of 60.00 from holding Blackrock Taxable Municipal or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Blackrock Taxable Municipal
Performance |
| Timeline |
| Western Asset Diversified |
| Blackrock Taxable |
Western Asset and Blackrock Taxable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Blackrock Taxable
The main advantage of trading using opposite Western Asset and Blackrock Taxable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Blackrock Taxable 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 Taxable will offset losses from the drop in Blackrock Taxable's long position.| Western Asset vs. Neuberger Berman Next | Western Asset vs. Doubleline Yield Opportunities | Western Asset vs. PIMCO Access Income | Western Asset vs. Blackrock Innovation Growth |
| Blackrock Taxable vs. Nuveen Build America | Blackrock Taxable vs. DWS Municipal Income | Blackrock Taxable vs. Blackrock Muniholdings Closed | Blackrock Taxable vs. Eaton Vance Senior |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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