Correlation Between Ab Growth and Western Asset
Can any of the company-specific risk be diversified away by investing in both Ab Growth 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 Growth 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 Growth Fund and Western Asset Municipal, you can compare the effects of market volatilities on Ab Growth 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 Growth with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Growth and Western Asset.
Diversification Opportunities for Ab Growth and Western Asset
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AGRFX and Western is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ab Growth Fund 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 Ab Growth 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 Growth Fund 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 Ab Growth i.e., Ab Growth and Western Asset go up and down completely randomly.
Pair Corralation between Ab Growth and Western Asset
Assuming the 90 days horizon Ab Growth Fund is expected to generate 3.05 times more return on investment than Western Asset. However, Ab Growth is 3.05 times more volatile than Western Asset Municipal. It trades about 0.23 of its potential returns per unit of risk. Western Asset Municipal is currently generating about -0.08 per unit of risk. If you would invest 12,165 in Ab Growth Fund on September 3, 2024 and sell it today you would earn a total of 1,208 from holding Ab Growth Fund or generate 9.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Growth Fund vs. Western Asset Municipal
Performance |
| Timeline |
| Ab Growth Fund |
| Western Asset Municipal |
Ab Growth and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Growth and Western Asset
The main advantage of trading using opposite Ab Growth and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Growth 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 Growth vs. T Rowe Price | Ab Growth vs. Fa 529 Aggressive | Ab Growth vs. Ab Value Fund | Ab Growth vs. Leggmason Partners Institutional |
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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 the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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