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 Investment, 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
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DTF and Western is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding DTF Tax Free and Western Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Investment 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 Investment 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 0.84 times more return on investment than Western Asset. However, DTF Tax Free is 1.19 times less risky than Western Asset. It trades about 0.09 of its potential returns per unit of risk. Western Asset Investment is currently generating about -0.1 per unit of risk. If you would invest 1,117 in DTF Tax Free on August 28, 2024 and sell it today you would earn a total of 9.00 from holding DTF Tax Free or generate 0.81% 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 Investment
Performance |
| Timeline |
| DTF Tax Free |
| Western Asset Investment |
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. PowerUp Acquisition Corp | DTF Tax vs. Aurora Innovation | DTF Tax vs. HUMANA INC | DTF Tax vs. Aquagold International |
| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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