Correlation Between Western Asset and Miller/howard High
Can any of the company-specific risk be diversified away by investing in both Western Asset and Miller/howard High 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 Miller/howard High 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 Millerhoward High Income, you can compare the effects of market volatilities on Western Asset and Miller/howard High 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 Miller/howard High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Miller/howard High.
Diversification Opportunities for Western Asset and Miller/howard High
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Miller/howard is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Mortgage and Millerhoward High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Millerhoward High Income 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 Miller/howard High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Millerhoward High Income has no effect on the direction of Western Asset i.e., Western Asset and Miller/howard High go up and down completely randomly.
Pair Corralation between Western Asset and Miller/howard High
Considering the 90-day investment horizon Western Asset is expected to generate 1.82 times less return on investment than Miller/howard High. But when comparing it to its historical volatility, Western Asset Mortgage is 1.41 times less risky than Miller/howard High. It trades about 0.15 of its potential returns per unit of risk. Millerhoward High Income is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,077 in Millerhoward High Income on August 24, 2024 and sell it today you would earn a total of 179.00 from holding Millerhoward High Income or generate 16.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Mortgage vs. Millerhoward High Income
Performance |
| Timeline |
| Western Asset Mortgage |
| Millerhoward High Income |
Western Asset and Miller/howard High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Miller/howard High
The main advantage of trading using opposite Western Asset and Miller/howard High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Miller/howard High 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 Miller/howard High will offset losses from the drop in Miller/howard High's long position.| Western Asset vs. Tekla Healthcare Investors | Western Asset vs. Blackrock Enhanced Capital | Western Asset vs. Tekla Life Sciences | Western Asset vs. Nuveen New York |
| Miller/howard High vs. Tekla Healthcare Investors | Miller/howard High vs. Blackrock Enhanced Capital | Miller/howard High vs. Tekla Life Sciences | Miller/howard High vs. Nuveen New York |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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