Correlation Between Barings Active and Western Asset
Can any of the company-specific risk be diversified away by investing in both Barings Active 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 Barings Active and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings Active Short and Western Asset Municipal, you can compare the effects of market volatilities on Barings Active 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 Barings Active with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Active and Western Asset.
Diversification Opportunities for Barings Active and Western Asset
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Barings and Western is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Barings Active Short 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 Barings Active 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 Barings Active Short 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 Barings Active i.e., Barings Active and Western Asset go up and down completely randomly.
Pair Corralation between Barings Active and Western Asset
Assuming the 90 days horizon Barings Active is expected to generate 2.97 times less return on investment than Western Asset. But when comparing it to its historical volatility, Barings Active Short is 2.34 times less risky than Western Asset. It trades about 0.18 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 725.00 in Western Asset Municipal on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Western Asset Municipal or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barings Active Short vs. Western Asset Municipal
Performance |
| Timeline |
| Barings Active Short |
| Western Asset Municipal |
Barings Active and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Active and Western Asset
The main advantage of trading using opposite Barings Active and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Active 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.| Barings Active vs. Pax High Yield | Barings Active vs. Jpmorgan High Yield | Barings Active vs. Msift High Yield | Barings Active vs. City National Rochdale |
| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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