Correlation Between Fa 529 and Western Asset
Can any of the company-specific risk be diversified away by investing in both Fa 529 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 Fa 529 and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fa 529 Aggressive and Western Asset Municipal, you can compare the effects of market volatilities on Fa 529 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 Fa 529 with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fa 529 and Western Asset.
Diversification Opportunities for Fa 529 and Western Asset
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FFCGX and Western is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Fa 529 Aggressive 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 Fa 529 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 Fa 529 Aggressive 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 Fa 529 i.e., Fa 529 and Western Asset go up and down completely randomly.
Pair Corralation between Fa 529 and Western Asset
Assuming the 90 days horizon Fa 529 Aggressive is expected to generate 1.91 times more return on investment than Western Asset. However, Fa 529 is 1.91 times more volatile than Western Asset Municipal. It trades about 0.06 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.0 per unit of risk. If you would invest 3,992 in Fa 529 Aggressive on August 28, 2024 and sell it today you would earn a total of 38.00 from holding Fa 529 Aggressive or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Fa 529 Aggressive vs. Western Asset Municipal
Performance |
| Timeline |
| Fa 529 Aggressive |
| Western Asset Municipal |
Fa 529 and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fa 529 and Western Asset
The main advantage of trading using opposite Fa 529 and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fa 529 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.| Fa 529 vs. Vanguard Total Stock | Fa 529 vs. Vanguard 500 Index | Fa 529 vs. Vanguard Total Stock | Fa 529 vs. Vanguard Total Stock |
| Western Asset vs. Baird Strategic Municipal | Western Asset vs. Counterpoint Tactical Municipal | Western Asset vs. California High Yield Municipal | Western Asset vs. Alliancebernstein National Municipal |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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