Correlation Between Western Asset and IShares 5
Can any of the company-specific risk be diversified away by investing in both Western Asset and IShares 5 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 IShares 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Short and iShares 5 10 Year, you can compare the effects of market volatilities on Western Asset and IShares 5 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 IShares 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and IShares 5.
Diversification Opportunities for Western Asset and IShares 5
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and IShares is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Short and iShares 5 10 Year in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 5 10 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 Short are associated (or correlated) with IShares 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares 5 10 has no effect on the direction of Western Asset i.e., Western Asset and IShares 5 go up and down completely randomly.
Pair Corralation between Western Asset and IShares 5
Given the investment horizon of 90 days Western Asset is expected to generate 1.48 times less return on investment than IShares 5. But when comparing it to its historical volatility, Western Asset Short is 2.66 times less risky than IShares 5. It trades about 0.22 of its potential returns per unit of risk. iShares 5 10 Year is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,022 in iShares 5 10 Year on September 1, 2024 and sell it today you would earn a total of 251.00 from holding iShares 5 10 Year or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Short vs. iShares 5 10 Year
Performance |
| Timeline |
| Western Asset Short |
| iShares 5 10 |
Western Asset and IShares 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and IShares 5
The main advantage of trading using opposite Western Asset and IShares 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, IShares 5 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 IShares 5 will offset losses from the drop in IShares 5's long position.| Western Asset vs. Valued Advisers Trust | Western Asset vs. Columbia Diversified Fixed | Western Asset vs. Principal Exchange Traded Funds | Western Asset vs. Doubleline Etf Trust |
| IShares 5 vs. iShares ESG USD | IShares 5 vs. FlexShares Disciplined Duration | IShares 5 vs. iShares ESG 1 5 | IShares 5 vs. First Trust Emerging |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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