Correlation Between Fabxx and Western Asset
Can any of the company-specific risk be diversified away by investing in both Fabxx 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 Fabxx and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fabxx and Western Asset Municipal, you can compare the effects of market volatilities on Fabxx 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 Fabxx with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fabxx and Western Asset.
Diversification Opportunities for Fabxx and Western Asset
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fabxx and Western is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Fabxx and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and Fabxx 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 Fabxx 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 Municipal has no effect on the direction of Fabxx i.e., Fabxx and Western Asset go up and down completely randomly.
Pair Corralation between Fabxx and Western Asset
Assuming the 90 days horizon Fabxx is expected to under-perform the Western Asset. In addition to that, Fabxx is 11.25 times more volatile than Western Asset Municipal. It trades about -0.13 of its total potential returns per unit of risk. Western Asset Municipal is currently generating about 0.11 per unit of volatility. If you would invest 723.00 in Western Asset Municipal on September 1, 2024 and sell it today you would earn a total of 6.00 from holding Western Asset Municipal or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fabxx vs. Western Asset Municipal
Performance |
| Timeline |
| Fabxx |
| Western Asset Municipal |
Fabxx and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fabxx and Western Asset
The main advantage of trading using opposite Fabxx and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fabxx 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.| Fabxx vs. Vanguard Financials Index | Fabxx vs. Blackrock Financial Institutions | Fabxx vs. Financials Ultrasector Profund | Fabxx vs. Mesirow Financial Small |
| Western Asset vs. Lord Abbett Diversified | Western Asset vs. Blackrock Conservative Prprdptfinstttnl | Western Asset vs. Pioneer Diversified High | Western Asset vs. Aqr Diversified Arbitrage |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |