Correlation Between Western Asset and Thornburg Income
Can any of the company-specific risk be diversified away by investing in both Western Asset and Thornburg Income 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 Thornburg Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Global and Thornburg Income Builder, you can compare the effects of market volatilities on Western Asset and Thornburg Income 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 Thornburg Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Thornburg Income.
Diversification Opportunities for Western Asset and Thornburg Income
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Thornburg is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Thornburg Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Income Builder 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 Global are associated (or correlated) with Thornburg Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Income Builder has no effect on the direction of Western Asset i.e., Western Asset and Thornburg Income go up and down completely randomly.
Pair Corralation between Western Asset and Thornburg Income
Considering the 90-day investment horizon Western Asset Global is expected to generate 1.09 times more return on investment than Thornburg Income. However, Western Asset is 1.09 times more volatile than Thornburg Income Builder. It trades about 0.05 of its potential returns per unit of risk. Thornburg Income Builder is currently generating about -0.26 per unit of risk. If you would invest 662.00 in Western Asset Global on August 24, 2024 and sell it today you would earn a total of 5.00 from holding Western Asset Global or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Global vs. Thornburg Income Builder
Performance |
| Timeline |
| Western Asset Global |
| Thornburg Income Builder |
Western Asset and Thornburg Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Thornburg Income
The main advantage of trading using opposite Western Asset and Thornburg Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Thornburg Income 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 Thornburg Income will offset losses from the drop in Thornburg Income's long position.| Western Asset vs. Western Asset High | Western Asset vs. BNY Mellon High | Western Asset vs. Allspring Income Opportunities | Western Asset vs. Allianzgi Convertible Income |
| Thornburg Income vs. Guggenheim Active Allocation | Thornburg Income vs. Pioneer Floating Rate | Thornburg Income vs. DTF Tax Free | Thornburg Income vs. BlackRock Floating Rate |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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