Correlation Between Highland Floating and Western Asset
Can any of the company-specific risk be diversified away by investing in both Highland Floating 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 Highland Floating and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highland Floating Rate and Western Asset Emerging, you can compare the effects of market volatilities on Highland Floating 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 Highland Floating with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highland Floating and Western Asset.
Diversification Opportunities for Highland Floating and Western Asset
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Highland and Western is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Highland Floating Rate and Western Asset Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Emerging and Highland Floating 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 Highland Floating Rate 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 Emerging has no effect on the direction of Highland Floating i.e., Highland Floating and Western Asset go up and down completely randomly.
Pair Corralation between Highland Floating and Western Asset
Given the investment horizon of 90 days Highland Floating Rate is expected to under-perform the Western Asset. In addition to that, Highland Floating is 2.14 times more volatile than Western Asset Emerging. It trades about -0.04 of its total potential returns per unit of risk. Western Asset Emerging is currently generating about 0.1 per unit of volatility. If you would invest 752.00 in Western Asset Emerging on August 28, 2024 and sell it today you would earn a total of 240.00 from holding Western Asset Emerging or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highland Floating Rate vs. Western Asset Emerging
Performance |
| Timeline |
| Highland Floating Rate |
| Western Asset Emerging |
Highland Floating and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highland Floating and Western Asset
The main advantage of trading using opposite Highland Floating and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highland Floating 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.| Highland Floating vs. Neuberger Berman Next | Highland Floating vs. SRH Total Return | Highland Floating vs. Nuveen Municipal Credit | Highland Floating vs. Doubleline Income Solutions |
| Western Asset vs. Doubleline Yield Opportunities | Western Asset vs. Highland Floating Rate | Western Asset vs. Doubleline Opportunistic Credit | Western Asset vs. Alliancebernstein Global High |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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