Correlation Between Western Asset and Blackrock Smid-cap
Can any of the company-specific risk be diversified away by investing in both Western Asset and Blackrock Smid-cap 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 Smid-cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Blackrock Smid Cap Growth, you can compare the effects of market volatilities on Western Asset and Blackrock Smid-cap 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 Smid-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Blackrock Smid-cap.
Diversification Opportunities for Western Asset and Blackrock Smid-cap
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Blackrock is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Blackrock Smid Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Smid Cap 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 Municipal are associated (or correlated) with Blackrock Smid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Smid Cap has no effect on the direction of Western Asset i.e., Western Asset and Blackrock Smid-cap go up and down completely randomly.
Pair Corralation between Western Asset and Blackrock Smid-cap
Assuming the 90 days horizon Western Asset is expected to generate 701.67 times less return on investment than Blackrock Smid-cap. But when comparing it to its historical volatility, Western Asset Municipal is 3.72 times less risky than Blackrock Smid-cap. It trades about 0.0 of its potential returns per unit of risk. Blackrock Smid Cap Growth is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,341 in Blackrock Smid Cap Growth on August 27, 2024 and sell it today you would earn a total of 121.00 from holding Blackrock Smid Cap Growth or generate 9.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Blackrock Smid Cap Growth
Performance |
| Timeline |
| Western Asset Municipal |
| Blackrock Smid Cap |
Western Asset and Blackrock Smid-cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Blackrock Smid-cap
The main advantage of trading using opposite Western Asset and Blackrock Smid-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Blackrock Smid-cap 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 Smid-cap will offset losses from the drop in Blackrock Smid-cap's long position.| Western Asset vs. T Rowe Price | Western Asset vs. Gamco Global Telecommunications | Western Asset vs. Oklahoma Municipal Fund | Western Asset vs. Vanguard Short Term Government |
| Blackrock Smid-cap vs. Western Asset Municipal | Blackrock Smid-cap vs. Falcon Focus Scv | Blackrock Smid-cap vs. Scharf Global Opportunity | Blackrock Smid-cap vs. Red Oak Technology |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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