Correlation Between Bank of New York and Western Asset
Can any of the company-specific risk be diversified away by investing in both Bank of New York 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 Bank of New York and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of New and Western Asset Municipal, you can compare the effects of market volatilities on Bank of New York 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 Bank of New York with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of New York and Western Asset.
Diversification Opportunities for Bank of New York and Western Asset
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Western is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bank of New 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 Bank of New York 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 Bank of New 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 Bank of New York i.e., Bank of New York and Western Asset go up and down completely randomly.
Pair Corralation between Bank of New York and Western Asset
Allowing for the 90-day total investment horizon Bank of New is expected to generate 1.71 times more return on investment than Western Asset. However, Bank of New York is 1.71 times more volatile than Western Asset Municipal. It trades about 0.32 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.26 per unit of risk. If you would invest 7,593 in Bank of New on August 31, 2024 and sell it today you would earn a total of 581.00 from holding Bank of New or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of New vs. Western Asset Municipal
Performance |
| Timeline |
| Bank of New York |
| Western Asset Municipal |
Bank of New York and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of New York and Western Asset
The main advantage of trading using opposite Bank of New York and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of New York 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.| Bank of New York vs. Northern Trust | Bank of New York vs. Invesco Plc | Bank of New York vs. Franklin Resources | Bank of New York vs. T Rowe Price |
| Western Asset vs. Western Asset Managed | Western Asset vs. Blackrock Muniholdings Quality | Western Asset vs. DTF Tax Free | Western Asset vs. John Hancock Income |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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