Correlation Between William Blair and Western Asset

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

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

Diversification Opportunities for William Blair and Western Asset

0.11

Correlation Coefficient

William Blair  Western Asset

Average diversification

The 3 months correlation between William and Western is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding William Blair International and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and William Blair 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 William Blair International 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 Municipal has no effect on the direction of William Blair i.e., William Blair and Western Asset go up and down completely randomly.

Pair Corralation between William Blair and Western Asset

Assuming the 90 days horizon William Blair International is expected to generate 3.28 times more return on investment than Western Asset. However, William Blair is 3.28 times more volatile than Western Asset Municipal. It trades about 0.04 of its potential returns per unit of risk. Western Asset Municipal is currently generating about -0.15 per unit of risk. If you would invest  1,211  in William Blair International on December 29, 2024 and sell it today you would earn a total of  27.00  from holding William Blair International or generate 2.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

William Blair International  vs.  Western Asset Municipal

William Blair Intern

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair International are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, William Blair is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Asset Municipal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Western Asset Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Western Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with William Blair and Western Asset

The main advantage of trading using opposite William Blair and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Blair 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 William Blair International and Western Asset Municipal 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.