Correlation Between Western Asset and Highland Floating
Can any of the company-specific risk be diversified away by investing in both Western Asset and Highland Floating 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 Highland Floating 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 Highland Floating Rate, you can compare the effects of market volatilities on Western Asset and Highland Floating 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 Highland Floating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Highland Floating.
Diversification Opportunities for Western Asset and Highland Floating
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Highland is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Emerging and Highland Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highland Floating Rate 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 Highland Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highland Floating Rate has no effect on the direction of Western Asset i.e., Western Asset and Highland Floating go up and down completely randomly.
Pair Corralation between Western Asset and Highland Floating
Considering the 90-day investment horizon Western Asset Emerging is expected to generate 0.47 times more return on investment than Highland Floating. However, Western Asset Emerging is 2.14 times less risky than Highland Floating. It trades about 0.1 of its potential returns per unit of risk. Highland Floating Rate is currently generating about -0.04 per unit of risk. If you would invest 752.00 in Western Asset Emerging on August 28, 2024 and sell it today you would earn a total of 240.00 from holding Western Asset Emerging or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Emerging vs. Highland Floating Rate
Performance |
| Timeline |
| Western Asset Emerging |
| Highland Floating Rate |
Western Asset and Highland Floating Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Highland Floating
The main advantage of trading using opposite Western Asset and Highland Floating positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Highland Floating 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 Highland Floating will offset losses from the drop in Highland Floating'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 |
| Highland Floating vs. Neuberger Berman Next | Highland Floating vs. SRH Total Return | Highland Floating vs. Nuveen Municipal Credit | Highland Floating vs. Doubleline Income Solutions |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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