Correlation Between First American and Western Asset
Can any of the company-specific risk be diversified away by investing in both First American 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 American 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 American Funds and Western Asset Pennsylvania, you can compare the effects of market volatilities on First American 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 American with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of First American and Western Asset.
Diversification Opportunities for First American and Western Asset
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between First and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First American Funds and Western Asset Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Pennsy and First American 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 American Funds 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 Pennsy has no effect on the direction of First American i.e., First American and Western Asset go up and down completely randomly.
Pair Corralation between First American and Western Asset
If you would invest 1,165 in Western Asset Pennsylvania on January 5, 2025 and sell it today you would earn a total of 2.00 from holding Western Asset Pennsylvania or generate 0.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First American Funds vs. Western Asset Pennsylvania
Performance |
| Timeline |
| First American Funds |
| Western Asset Pennsy |
First American and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First American and Western Asset
The main advantage of trading using opposite First American and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First American 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 American vs. Hennessy Bp Energy | First American vs. Salient Mlp Energy | First American vs. Thrivent Natural Resources | First American vs. Goehring Rozencwajg Resources |
| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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