Correlation Between DTF Tax and Western Asset
Can any of the company-specific risk be diversified away by investing in both DTF Tax 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 DTF Tax and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DTF Tax Free and Western Asset Global, you can compare the effects of market volatilities on DTF Tax 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 DTF Tax with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTF Tax and Western Asset.
Diversification Opportunities for DTF Tax and Western Asset
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DTF and Western is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding DTF Tax Free and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global and DTF Tax 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 DTF Tax Free 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 Global has no effect on the direction of DTF Tax i.e., DTF Tax and Western Asset go up and down completely randomly.
Pair Corralation between DTF Tax and Western Asset
Considering the 90-day investment horizon DTF Tax Free is expected to generate 0.52 times more return on investment than Western Asset. However, DTF Tax Free is 1.91 times less risky than Western Asset. It trades about 0.11 of its potential returns per unit of risk. Western Asset Global is currently generating about 0.03 per unit of risk. If you would invest 1,074 in DTF Tax Free on September 2, 2024 and sell it today you would earn a total of 53.00 from holding DTF Tax Free or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DTF Tax Free vs. Western Asset Global
Performance |
| Timeline |
| DTF Tax Free |
| Western Asset Global |
DTF Tax and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DTF Tax and Western Asset
The main advantage of trading using opposite DTF Tax and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DTF Tax 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.| DTF Tax vs. MFS Investment Grade | DTF Tax vs. Eaton Vance National | DTF Tax vs. Invesco High Income | DTF Tax vs. MFS High Yield |
| Western Asset vs. Doubleline Yield Opportunities | Western Asset vs. Highland Floating Rate | Western Asset vs. Doubleline Opportunistic Credit | Western Asset vs. Western Asset Emerging |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Stocks Directory Find actively traded stocks across global markets |