Correlation Between Western Asset and Delaware Extended
Can any of the company-specific risk be diversified away by investing in both Western Asset and Delaware Extended 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 Delaware Extended 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 Delaware Extended Duration, you can compare the effects of market volatilities on Western Asset and Delaware Extended 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 Delaware Extended. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Delaware Extended.
Diversification Opportunities for Western Asset and Delaware Extended
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Delaware is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Mortgage and Delaware Extended Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delaware Extended 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 Delaware Extended. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delaware Extended has no effect on the direction of Western Asset i.e., Western Asset and Delaware Extended go up and down completely randomly.
Pair Corralation between Western Asset and Delaware Extended
Considering the 90-day investment horizon Western Asset Mortgage is expected to generate 0.99 times more return on investment than Delaware Extended. However, Western Asset Mortgage is 1.01 times less risky than Delaware Extended. It trades about 0.11 of its potential returns per unit of risk. Delaware Extended Duration is currently generating about 0.02 per unit of risk. If you would invest 827.00 in Western Asset Mortgage on November 28, 2024 and sell it today you would earn a total of 358.00 from holding Western Asset Mortgage or generate 43.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Mortgage vs. Delaware Extended Duration
Performance |
| Timeline |
| Western Asset Mortgage |
| Delaware Extended |
Western Asset and Delaware Extended Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Delaware Extended
The main advantage of trading using opposite Western Asset and Delaware Extended positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Delaware Extended 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 Delaware Extended will offset losses from the drop in Delaware Extended'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 |
| Delaware Extended vs. Optimum Small Mid Cap | Delaware Extended vs. Optimum Small Mid Cap | Delaware Extended vs. Ivy Apollo Multi Asset | Delaware Extended vs. Optimum Fixed 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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