Correlation Between Western Asset and Blackrock Advantage
Can any of the company-specific risk be diversified away by investing in both Western Asset and Blackrock Advantage 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 Advantage 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 Advantage Total, you can compare the effects of market volatilities on Western Asset and Blackrock Advantage 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 Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Blackrock Advantage.
Diversification Opportunities for Western Asset and Blackrock Advantage
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Blackrock is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Blackrock Advantage Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Advantage Total 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 Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Advantage Total has no effect on the direction of Western Asset i.e., Western Asset and Blackrock Advantage go up and down completely randomly.
Pair Corralation between Western Asset and Blackrock Advantage
Assuming the 90 days horizon Western Asset is expected to generate 11.69 times less return on investment than Blackrock Advantage. But when comparing it to its historical volatility, Western Asset Municipal is 3.54 times less risky than Blackrock Advantage. It trades about 0.09 of its potential returns per unit of risk. Blackrock Advantage Total is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 2,963 in Blackrock Advantage Total on August 31, 2024 and sell it today you would earn a total of 248.00 from holding Blackrock Advantage Total or generate 8.37% 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 Advantage Total
Performance |
| Timeline |
| Western Asset Municipal |
| Blackrock Advantage Total |
Western Asset and Blackrock Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Blackrock Advantage
The main advantage of trading using opposite Western Asset and Blackrock Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Blackrock Advantage 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 Advantage will offset losses from the drop in Blackrock Advantage'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 Advantage vs. T Rowe Price | Blackrock Advantage vs. Western Asset Municipal | Blackrock Advantage vs. Rbb Fund | Blackrock Advantage vs. Ab Value Fund |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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