Correlation Between Balanced Fund and Western Asset
Can any of the company-specific risk be diversified away by investing in both Balanced Fund 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 Balanced Fund and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Retail and Western Asset Short Term, you can compare the effects of market volatilities on Balanced Fund 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 Balanced Fund with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Western Asset.
Diversification Opportunities for Balanced Fund and Western Asset
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Balanced and Western is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Retail and Western Asset Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Short and Balanced Fund 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 Balanced Fund Retail 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 Short has no effect on the direction of Balanced Fund i.e., Balanced Fund and Western Asset go up and down completely randomly.
Pair Corralation between Balanced Fund and Western Asset
Assuming the 90 days horizon Balanced Fund Retail is expected to generate 4.07 times more return on investment than Western Asset. However, Balanced Fund is 4.07 times more volatile than Western Asset Short Term. It trades about 0.07 of its potential returns per unit of risk. Western Asset Short Term is currently generating about 0.0 per unit of risk. If you would invest 1,423 in Balanced Fund Retail on August 28, 2024 and sell it today you would earn a total of 12.00 from holding Balanced Fund Retail or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Retail vs. Western Asset Short Term
Performance |
| Timeline |
| Balanced Fund Retail |
| Western Asset Short |
Balanced Fund and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Western Asset
The main advantage of trading using opposite Balanced Fund and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund 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.| Balanced Fund vs. Muirfield Fund Retail | Balanced Fund vs. Dynamic Growth Fund | Balanced Fund vs. Infrastructure Fund Retail | Balanced Fund vs. Quantex Fund Retail |
| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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