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 Diversified and Blackrock Lifepath Esg, 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
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Blackrock is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Blackrock Lifepath Esg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Lifepath Esg 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 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 Esg 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 is expected to generate 7.89 times less return on investment than Blackrock Lifepath. But when comparing it to its historical volatility, Western Asset Diversified is 2.25 times less risky than Blackrock Lifepath. It trades about 0.03 of its potential returns per unit of risk. Blackrock Lifepath Esg is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,189 in Blackrock Lifepath Esg on September 3, 2024 and sell it today you would earn a total of 286.00 from holding Blackrock Lifepath Esg or generate 24.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Blackrock Lifepath Esg
Performance |
| Timeline |
| Western Asset Diversified |
| Blackrock Lifepath Esg |
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. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Blackrock Lifepath vs. Vanguard Target Retirement | Blackrock Lifepath vs. American Funds 2050 | Blackrock Lifepath vs. American Funds 2050 | Blackrock Lifepath vs. American Funds 2050 |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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