Correlation Between Western Asset and Invesco High
Can any of the company-specific risk be diversified away by investing in both Western Asset and Invesco 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 Invesco High 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 Invesco High Income, you can compare the effects of market volatilities on Western Asset and Invesco 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 Invesco High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Invesco High.
Diversification Opportunities for Western Asset and Invesco High
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Invesco is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Invesco High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco 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 Global are associated (or correlated) with Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Income has no effect on the direction of Western Asset i.e., Western Asset and Invesco High go up and down completely randomly.
Pair Corralation between Western Asset and Invesco High
Considering the 90-day investment horizon Western Asset Global is expected to under-perform the Invesco High. In addition to that, Western Asset is 1.38 times more volatile than Invesco High Income. It trades about -0.03 of its total potential returns per unit of risk. Invesco High Income is currently generating about 0.08 per unit of volatility. If you would invest 1,121 in Invesco High Income on August 28, 2024 and sell it today you would earn a total of 10.00 from holding Invesco High Income or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Global vs. Invesco High Income
Performance |
| Timeline |
| Western Asset Global |
| Invesco High Income |
Western Asset and Invesco High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Invesco High
The main advantage of trading using opposite Western Asset and Invesco High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Invesco 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 Invesco High will offset losses from the drop in Invesco High'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 |
| Invesco High vs. MFS High Income | Invesco High vs. MFS Investment Grade | Invesco High vs. Eaton Vance National | Invesco High vs. Invesco High 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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