Correlation Between Western Asset and Doubleline Income
Can any of the company-specific risk be diversified away by investing in both Western Asset and Doubleline Income 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 Western Asset and Doubleline Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Doubleline Income Solutions, you can compare the effects of market volatilities on Western Asset and Doubleline Income 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 Western Asset with a short position of Doubleline Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Doubleline Income.
Diversification Opportunities for Western Asset and Doubleline Income
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Doubleline is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Doubleline Income Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubleline Income and Western Asset 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 Western Asset High are associated (or correlated) with Doubleline Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubleline Income has no effect on the direction of Western Asset i.e., Western Asset and Doubleline Income go up and down completely randomly.
Pair Corralation between Western Asset and Doubleline Income
Considering the 90-day investment horizon Western Asset is expected to generate 1.4 times less return on investment than Doubleline Income. But when comparing it to its historical volatility, Western Asset High is 1.23 times less risky than Doubleline Income. It trades about 0.06 of its potential returns per unit of risk. Doubleline Income Solutions is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 969.00 in Doubleline Income Solutions on September 3, 2024 and sell it today you would earn a total of 311.00 from holding Doubleline Income Solutions or generate 32.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Doubleline Income Solutions
Performance |
| Timeline |
| Western Asset High |
| Doubleline Income |
Western Asset and Doubleline Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Doubleline Income
The main advantage of trading using opposite Western Asset and Doubleline Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Doubleline Income 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 Doubleline Income will offset losses from the drop in Doubleline Income's long position.| Western Asset vs. Tekla Healthcare Investors | Western Asset vs. Tekla Life Sciences | Western Asset vs. Cohen Steers Reit | Western Asset vs. XAI Octagon Floating |
| Doubleline Income vs. Highland Floating Rate | Doubleline Income vs. Pimco Dynamic Income | Doubleline Income vs. Doubleline Opportunistic Credit | Doubleline Income vs. Neuberger Berman Next |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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