Correlation Between Western Asset and Aberdeen Income
Can any of the company-specific risk be diversified away by investing in both Western Asset and Aberdeen 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 Aberdeen 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 Aberdeen Income Credit, you can compare the effects of market volatilities on Western Asset and Aberdeen 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 Aberdeen Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Aberdeen Income.
Diversification Opportunities for Western Asset and Aberdeen Income
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Aberdeen is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Aberdeen Income Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Income Credit 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 Aberdeen Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Income Credit has no effect on the direction of Western Asset i.e., Western Asset and Aberdeen Income go up and down completely randomly.
Pair Corralation between Western Asset and Aberdeen Income
Considering the 90-day investment horizon Western Asset High is expected to generate 1.76 times more return on investment than Aberdeen Income. However, Western Asset is 1.76 times more volatile than Aberdeen Income Credit. It trades about 0.25 of its potential returns per unit of risk. Aberdeen Income Credit is currently generating about 0.3 per unit of risk. If you would invest 433.00 in Western Asset High on September 5, 2024 and sell it today you would earn a total of 17.00 from holding Western Asset High or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Aberdeen Income Credit
Performance |
| Timeline |
| Western Asset High |
| Aberdeen Income Credit |
Western Asset and Aberdeen Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Aberdeen Income
The main advantage of trading using opposite Western Asset and Aberdeen Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Aberdeen 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 Aberdeen Income will offset losses from the drop in Aberdeen Income's long position.| Western Asset vs. BNY Mellon High | Western Asset vs. Allianzgi Convertible Income | Western Asset vs. Western Asset High | Western Asset vs. Voya Global Advantage |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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