Correlation Between Us Government and Western Asset
Can any of the company-specific risk be diversified away by investing in both Us Government 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 Us Government and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Government Plus and Western Asset Inflation, you can compare the effects of market volatilities on Us Government 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 Us Government with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Government and Western Asset.
Diversification Opportunities for Us Government and Western Asset
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between GVPIX and Western is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Us Government Plus and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation and Us Government 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 Us Government Plus 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 Inflation has no effect on the direction of Us Government i.e., Us Government and Western Asset go up and down completely randomly.
Pair Corralation between Us Government and Western Asset
Assuming the 90 days horizon Us Government Plus is expected to under-perform the Western Asset. In addition to that, Us Government is 3.05 times more volatile than Western Asset Inflation. It trades about -0.02 of its total potential returns per unit of risk. Western Asset Inflation is currently generating about 0.02 per unit of volatility. If you would invest 919.00 in Western Asset Inflation on September 2, 2024 and sell it today you would earn a total of 41.00 from holding Western Asset Inflation or generate 4.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Government Plus vs. Western Asset Inflation
Performance |
| Timeline |
| Us Government Plus |
| Western Asset Inflation |
Us Government and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Government and Western Asset
The main advantage of trading using opposite Us Government and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Government 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.| Us Government vs. Short Real Estate | Us Government vs. Short Real Estate | Us Government vs. Ultrashort Mid Cap Profund | Us Government vs. Ultrashort Mid Cap Profund |
| Western Asset vs. Needham Aggressive Growth | Western Asset vs. Legg Mason Partners | Western Asset vs. Lgm Risk Managed | Western Asset vs. Franklin High 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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