Correlation Between Western Asset and CBH
Can any of the company-specific risk be diversified away by investing in both Western Asset and CBH 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 Western Asset and CBH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Mortgage and CBH, you can compare the effects of market volatilities on Western Asset and CBH 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 Western Asset with a short position of CBH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and CBH.
Diversification Opportunities for Western Asset and CBH
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and CBH is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Mortgage and CBH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBH and Western Asset 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 Western Asset Mortgage are associated (or correlated) with CBH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBH has no effect on the direction of Western Asset i.e., Western Asset and CBH go up and down completely randomly.
Pair Corralation between Western Asset and CBH
If you would invest 1,186 in Western Asset Mortgage on August 27, 2024 and sell it today you would earn a total of 13.00 from holding Western Asset Mortgage or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.76% |
| Values | Daily Returns |
Western Asset Mortgage vs. CBH
Performance |
| Timeline |
| Western Asset Mortgage |
| CBH |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Western Asset and CBH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and CBH
The main advantage of trading using opposite Western Asset and CBH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, CBH 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 CBH will offset losses from the drop in CBH's long position.| Western Asset vs. Western Asset High | Western Asset vs. Pioneer Municipal High | Western Asset vs. Doubleline Income Solutions | Western Asset vs. Doubleline Yield Opportunities |
| CBH vs. MFS Investment Grade | CBH vs. Invesco High Income | CBH vs. Eaton Vance National | CBH vs. Nuveen California Select |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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