Correlation Between Bond Fund and Western Asset
Can any of the company-specific risk be diversified away by investing in both Bond Fund 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 Bond Fund and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bond Fund Investor and Western Asset Inflation, you can compare the effects of market volatilities on Bond Fund 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 Bond Fund with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bond Fund and Western Asset.
Diversification Opportunities for Bond Fund and Western Asset
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bond and Western is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Investor 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 Bond Fund 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 Bond Fund Investor 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 Bond Fund i.e., Bond Fund and Western Asset go up and down completely randomly.
Pair Corralation between Bond Fund and Western Asset
Assuming the 90 days horizon Bond Fund Investor is expected to generate 0.99 times more return on investment than Western Asset. However, Bond Fund Investor is 1.01 times less risky than Western Asset. It trades about 0.07 of its potential returns per unit of risk. Western Asset Inflation is currently generating about 0.06 per unit of risk. If you would invest 803.00 in Bond Fund Investor on September 4, 2024 and sell it today you would earn a total of 50.00 from holding Bond Fund Investor or generate 6.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bond Fund Investor vs. Western Asset Inflation
Performance |
| Timeline |
| Bond Fund Investor |
| Western Asset Inflation |
Bond Fund and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bond Fund and Western Asset
The main advantage of trading using opposite Bond Fund and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bond Fund 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.| Bond Fund vs. Gmo High Yield | Bond Fund vs. Ab Bond Inflation | Bond Fund vs. Ultra Short Fixed Income | Bond Fund vs. Calamos Dynamic Convertible |
| 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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