Correlation Between First Trust and Western Asset
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Mlp and Western Asset Global, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Western Asset.
Diversification Opportunities for First Trust and Western Asset
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Western is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Mlp and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global and First Trust 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 First Trust Mlp 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 Global has no effect on the direction of First Trust i.e., First Trust and Western Asset go up and down completely randomly.
Pair Corralation between First Trust and Western Asset
Considering the 90-day investment horizon First Trust Mlp is expected to generate 1.23 times more return on investment than Western Asset. However, First Trust is 1.23 times more volatile than Western Asset Global. It trades about 0.16 of its potential returns per unit of risk. Western Asset Global is currently generating about 0.04 per unit of risk. If you would invest 740.00 in First Trust Mlp on August 29, 2024 and sell it today you would earn a total of 75.00 from holding First Trust Mlp or generate 10.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 13.74% |
| Values | Daily Returns |
First Trust Mlp vs. Western Asset Global
Performance |
| Timeline |
| First Trust Mlp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Western Asset Global |
First Trust and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Western Asset
The main advantage of trading using opposite First Trust and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. Franklin Templeton Limited | First Trust vs. Blackrock Floating Rate | First Trust vs. Cohen Steers Limited | First Trust vs. Eagle Point Income |
| Western Asset vs. Western Asset High | Western Asset vs. BNY Mellon High | Western Asset vs. Allspring Income Opportunities | Western Asset vs. Allianzgi Convertible 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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