Correlation Between Gotham Absolute and Western Asset
Can any of the company-specific risk be diversified away by investing in both Gotham Absolute 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 Gotham Absolute and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gotham Absolute Return and Western Asset Municipal, you can compare the effects of market volatilities on Gotham Absolute 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 Gotham Absolute with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gotham Absolute and Western Asset.
Diversification Opportunities for Gotham Absolute and Western Asset
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Gotham and Western is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Gotham Absolute Return 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 Gotham Absolute 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 Gotham Absolute Return 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 Gotham Absolute i.e., Gotham Absolute and Western Asset go up and down completely randomly.
Pair Corralation between Gotham Absolute and Western Asset
Assuming the 90 days horizon Gotham Absolute Return is expected to under-perform the Western Asset. In addition to that, Gotham Absolute is 2.29 times more volatile than Western Asset Municipal. It trades about -0.19 of its total potential returns per unit of risk. Western Asset Municipal is currently generating about 0.06 per unit of volatility. If you would invest 716.00 in Western Asset Municipal on December 4, 2024 and sell it today you would earn a total of 2.00 from holding Western Asset Municipal or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gotham Absolute Return vs. Western Asset Municipal
Performance |
| Timeline |
| Gotham Absolute Return |
| Western Asset Municipal |
Gotham Absolute and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gotham Absolute and Western Asset
The main advantage of trading using opposite Gotham Absolute and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gotham Absolute 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.| Gotham Absolute vs. Ft 7934 Corporate | Gotham Absolute vs. Scharf Global Opportunity | Gotham Absolute vs. Alternative Asset Allocation | Gotham Absolute vs. Arrow Managed Futures |
| Western Asset vs. Doubleline Emerging Markets | Western Asset vs. Massmutual Premier Diversified | Western Asset vs. Angel Oak Ultrashort | Western Asset vs. Aqr Sustainable Long Short |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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