Correlation Between Adams Diversified and Western Asset
Can any of the company-specific risk be diversified away by investing in both Adams Diversified 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 Adams Diversified and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adams Diversified Equity and Western Asset Inflation, you can compare the effects of market volatilities on Adams Diversified 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 Adams Diversified with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adams Diversified and Western Asset.
Diversification Opportunities for Adams Diversified and Western Asset
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adams and Western is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Adams Diversified Equity 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 Adams Diversified 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 Adams Diversified Equity 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 Adams Diversified i.e., Adams Diversified and Western Asset go up and down completely randomly.
Pair Corralation between Adams Diversified and Western Asset
Considering the 90-day investment horizon Adams Diversified Equity is expected to generate 2.17 times more return on investment than Western Asset. However, Adams Diversified is 2.17 times more volatile than Western Asset Inflation. It trades about 0.12 of its potential returns per unit of risk. Western Asset Inflation is currently generating about 0.02 per unit of risk. If you would invest 1,250 in Adams Diversified Equity on September 4, 2024 and sell it today you would earn a total of 818.00 from holding Adams Diversified Equity or generate 65.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Adams Diversified Equity vs. Western Asset Inflation
Performance |
| Timeline |
| Adams Diversified Equity |
| Western Asset Inflation |
Adams Diversified and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adams Diversified and Western Asset
The main advantage of trading using opposite Adams Diversified and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Diversified 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.| Adams Diversified vs. Tri Continental Closed | Adams Diversified vs. SRH Total Return | Adams Diversified vs. Putnam Municipal Opportunities | Adams Diversified vs. Tortoise Energy Independence |
| Western Asset vs. Ab Small Cap | Western Asset vs. Commonwealth Global Fund | Western Asset vs. Growth Strategy Fund | Western Asset vs. T Rowe Price |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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