Correlation Between Western Asset and Flaherty Crumrine
Can any of the company-specific risk be diversified away by investing in both Western Asset and Flaherty Crumrine 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 Flaherty Crumrine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Emerging and Flaherty Crumrine Preferred, you can compare the effects of market volatilities on Western Asset and Flaherty Crumrine 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 Flaherty Crumrine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Flaherty Crumrine.
Diversification Opportunities for Western Asset and Flaherty Crumrine
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Flaherty is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Emerging and Flaherty Crumrine Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flaherty Crumrine 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 Emerging are associated (or correlated) with Flaherty Crumrine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flaherty Crumrine has no effect on the direction of Western Asset i.e., Western Asset and Flaherty Crumrine go up and down completely randomly.
Pair Corralation between Western Asset and Flaherty Crumrine
Considering the 90-day investment horizon Western Asset is expected to generate 1.72 times less return on investment than Flaherty Crumrine. In addition to that, Western Asset is 1.35 times more volatile than Flaherty Crumrine Preferred. It trades about 0.12 of its total potential returns per unit of risk. Flaherty Crumrine Preferred is currently generating about 0.28 per unit of volatility. If you would invest 1,573 in Flaherty Crumrine Preferred on November 29, 2024 and sell it today you would earn a total of 34.00 from holding Flaherty Crumrine Preferred or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Emerging vs. Flaherty Crumrine Preferred
Performance |
| Timeline |
| Western Asset Emerging |
| Flaherty Crumrine |
Western Asset and Flaherty Crumrine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Flaherty Crumrine
The main advantage of trading using opposite Western Asset and Flaherty Crumrine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Flaherty Crumrine 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 Flaherty Crumrine will offset losses from the drop in Flaherty Crumrine's long position.| Western Asset vs. Doubleline Yield Opportunities | Western Asset vs. Highland Floating Rate | Western Asset vs. Doubleline Opportunistic Credit | Western Asset vs. Alliancebernstein Global High |
| Flaherty Crumrine vs. Flaherty Crumrine Total | Flaherty Crumrine vs. Flaherty Crumrine Preferred | Flaherty Crumrine vs. John Hancock Preferred | Flaherty Crumrine vs. Flaherty and Crumrine |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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