Correlation Between Western Asset and Blackrock Lifepath
Can any of the company-specific risk be diversified away by investing in both Western Asset and Blackrock Lifepath 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 Lifepath 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 Lifepath Dynamic, you can compare the effects of market volatilities on Western Asset and Blackrock Lifepath 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 Lifepath. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Blackrock Lifepath.
Diversification Opportunities for Western Asset and Blackrock Lifepath
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Blackrock is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Blackrock Lifepath Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Lifepath 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 Lifepath. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Lifepath has no effect on the direction of Western Asset i.e., Western Asset and Blackrock Lifepath go up and down completely randomly.
Pair Corralation between Western Asset and Blackrock Lifepath
Assuming the 90 days horizon Western Asset Municipal is expected to under-perform the Blackrock Lifepath. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Municipal is 1.29 times less risky than Blackrock Lifepath. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Blackrock Lifepath Dynamic is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 922.00 in Blackrock Lifepath Dynamic on August 31, 2024 and sell it today you would earn a total of 18.00 from holding Blackrock Lifepath Dynamic or generate 1.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Blackrock Lifepath Dynamic
Performance |
| Timeline |
| Western Asset Municipal |
| Blackrock Lifepath |
Western Asset and Blackrock Lifepath Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Blackrock Lifepath
The main advantage of trading using opposite Western Asset and Blackrock Lifepath positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Blackrock Lifepath 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 Lifepath will offset losses from the drop in Blackrock Lifepath's long position.| Western Asset vs. T Rowe Price | Western Asset vs. California Bond Fund | Western Asset vs. Blrc Sgy Mnp | Western Asset vs. Legg Mason Partners |
| Blackrock Lifepath vs. Oklahoma Municipal Fund | Blackrock Lifepath vs. Nuveen Minnesota Municipal | Blackrock Lifepath vs. California High Yield Municipal | Blackrock Lifepath vs. T Rowe Price |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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