Correlation Between Abbey Capital and Western Asset
Can any of the company-specific risk be diversified away by investing in both Abbey Capital 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 Abbey Capital and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abbey Capital Futures and Western Asset Short, you can compare the effects of market volatilities on Abbey Capital 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 Abbey Capital with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abbey Capital and Western Asset.
Diversification Opportunities for Abbey Capital and Western Asset
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Abbey and Western is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Abbey Capital Futures and Western Asset Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Short and Abbey Capital 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 Abbey Capital Futures 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 Short has no effect on the direction of Abbey Capital i.e., Abbey Capital and Western Asset go up and down completely randomly.
Pair Corralation between Abbey Capital and Western Asset
Assuming the 90 days horizon Abbey Capital is expected to generate 1.65 times less return on investment than Western Asset. In addition to that, Abbey Capital is 2.73 times more volatile than Western Asset Short. It trades about 0.04 of its total potential returns per unit of risk. Western Asset Short is currently generating about 0.16 per unit of volatility. If you would invest 472.00 in Western Asset Short on November 2, 2024 and sell it today you would earn a total of 13.00 from holding Western Asset Short or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Abbey Capital Futures vs. Western Asset Short
Performance |
| Timeline |
| Abbey Capital Futures |
| Western Asset Short |
Abbey Capital and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abbey Capital and Western Asset
The main advantage of trading using opposite Abbey Capital and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abbey Capital 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.| Abbey Capital vs. Ab Bond Inflation | Abbey Capital vs. Ab Bond Inflation | Abbey Capital vs. Short Duration Inflation | Abbey Capital vs. Ab Bond Inflation |
| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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