Correlation Between Blackrock Debt and Western Asset

Can any of the company-specific risk be diversified away by investing in both Blackrock Debt and Western Asset 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 Blackrock Debt and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blackrock Debt Strategies and Western Asset Diversified, you can compare the effects of market volatilities on Blackrock Debt and Western Asset 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 Blackrock Debt with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blackrock Debt and Western Asset.

Diversification Opportunities for Blackrock Debt and Western Asset

0.67

Correlation Coefficient

Blackrock Debt  Western Asset

Poor diversification

The 3 months correlation between Blackrock and Western is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Blackrock Debt Strategies and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified and Blackrock Debt 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 Blackrock Debt Strategies are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Diversified has no effect on the direction of Blackrock Debt i.e., Blackrock Debt and Western Asset go up and down completely randomly.

Pair Corralation between Blackrock Debt and Western Asset

Considering the 90-day investment horizon Blackrock Debt is expected to generate 9.23 times less return on investment than Western Asset. But when comparing it to its historical volatility, Blackrock Debt Strategies is 1.23 times less risky than Western Asset. It trades about 0.02 of its potential returns per unit of risk. Western Asset Diversified is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,378  in Western Asset Diversified on December 29, 2024 and sell it today you would earn a total of  68.00  from holding Western Asset Diversified or generate 4.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Blackrock Debt Strategies  vs.  Western Asset Diversified

Blackrock Debt Strategies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Debt Strategies are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable basic indicators, Blackrock Debt is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Western Asset Diversified

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Diversified are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental indicators, Western Asset is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Blackrock Debt and Western Asset

The main advantage of trading using opposite Blackrock Debt and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blackrock Debt position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.

The idea behind Blackrock Debt Strategies and Western Asset Diversified pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.