Correlation Between WESTERN ASSET and BlackRock Gwth

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Can any of the company-specific risk be diversified away by investing in both WESTERN ASSET and BlackRock Gwth 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 Gwth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WESTERN ASSET INFLATION and BlackRock Gwth Prepared, you can compare the effects of market volatilities on WESTERN ASSET and BlackRock Gwth 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 Gwth. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTERN ASSET and BlackRock Gwth.

Diversification Opportunities for WESTERN ASSET and BlackRock Gwth

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between WESTERN and BlackRock is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding WESTERN ASSET INFLATION and BlackRock Gwth Prepared in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Gwth Prepared 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 INFLATION are associated (or correlated) with BlackRock Gwth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Gwth Prepared has no effect on the direction of WESTERN ASSET i.e., WESTERN ASSET and BlackRock Gwth go up and down completely randomly.

Pair Corralation between WESTERN ASSET and BlackRock Gwth

Assuming the 90 days horizon WESTERN ASSET is expected to generate 1.48 times less return on investment than BlackRock Gwth. But when comparing it to its historical volatility, WESTERN ASSET INFLATION is 1.66 times less risky than BlackRock Gwth. It trades about 0.39 of its potential returns per unit of risk. BlackRock Gwth Prepared is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  1,217  in BlackRock Gwth Prepared on September 4, 2022 and sell it today you would earn a total of  102.00  from holding BlackRock Gwth Prepared or generate 8.38% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

WESTERN ASSET INFLATION  vs.  BlackRock Gwth Prepared

 Performance (%) 
       Timeline  
WESTERN ASSET INFLATION 
WESTERN Performance
0 of 100
Over the last 90 days WESTERN ASSET INFLATION has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, WESTERN ASSET is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

WESTERN Price Channel

BlackRock Gwth Prepared 
BlackRock Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock Gwth Prepared are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, BlackRock Gwth is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

BlackRock Price Channel

WESTERN ASSET and BlackRock Gwth Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WESTERN ASSET and BlackRock Gwth

The main advantage of trading using opposite WESTERN ASSET and BlackRock Gwth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTERN ASSET position performs unexpectedly, BlackRock Gwth 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 Gwth will offset losses from the drop in BlackRock Gwth's long position.
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The idea behind WESTERN ASSET INFLATION and BlackRock Gwth Prepared 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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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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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