Correlation Between Ab Bond and Western Asset
Can any of the company-specific risk be diversified away by investing in both Ab Bond 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 Ab Bond and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Bond Inflation and Western Asset Inflation, you can compare the effects of market volatilities on Ab Bond 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 Ab Bond with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Bond and Western Asset.
Diversification Opportunities for Ab Bond and Western Asset
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between ABNCX and Western is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ab Bond Inflation and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation and Ab Bond 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 Ab Bond Inflation 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 Inflation has no effect on the direction of Ab Bond i.e., Ab Bond and Western Asset go up and down completely randomly.
Pair Corralation between Ab Bond and Western Asset
Assuming the 90 days horizon Ab Bond Inflation is expected to generate 0.68 times more return on investment than Western Asset. However, Ab Bond Inflation is 1.46 times less risky than Western Asset. It trades about 0.05 of its potential returns per unit of risk. Western Asset Inflation is currently generating about 0.01 per unit of risk. If you would invest 940.00 in Ab Bond Inflation on August 24, 2024 and sell it today you would earn a total of 61.00 from holding Ab Bond Inflation or generate 6.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Bond Inflation vs. Western Asset Inflation
Performance |
| Timeline |
| Ab Bond Inflation |
| Western Asset Inflation |
Ab Bond and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Bond and Western Asset
The main advantage of trading using opposite Ab Bond and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Bond 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.| Ab Bond vs. Fidelity Government Money | Ab Bond vs. Prudential Government Income | Ab Bond vs. Ab Government Exchange | Ab Bond vs. Government Securities Fund |
| Western Asset vs. Ab Bond Inflation | Western Asset vs. Fidelity Sai Inflationfocused | Western Asset vs. Simt Multi Asset Inflation | Western Asset vs. Tiaa Cref Inflation Linked Bond |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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