Correlation Between Western Asset and Flaherty
Can any of the company-specific risk be diversified away by investing in both Western Asset and Flaherty 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 Flaherty 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 Flaherty and Crumrine, you can compare the effects of market volatilities on Western Asset and Flaherty 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 Flaherty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Flaherty.
Diversification Opportunities for Western Asset and Flaherty
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Flaherty is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Flaherty and Crumrine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flaherty and Crumrine 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 Flaherty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flaherty and Crumrine has no effect on the direction of Western Asset i.e., Western Asset and Flaherty go up and down completely randomly.
Pair Corralation between Western Asset and Flaherty
Considering the 90-day investment horizon Western Asset High is expected to generate 1.21 times more return on investment than Flaherty. However, Western Asset is 1.21 times more volatile than Flaherty and Crumrine. It trades about 0.08 of its potential returns per unit of risk. Flaherty and Crumrine is currently generating about -0.08 per unit of risk. If you would invest 436.00 in Western Asset High on August 24, 2024 and sell it today you would earn a total of 5.00 from holding Western Asset High or generate 1.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Flaherty and Crumrine
Performance |
| Timeline |
| Western Asset High |
| Flaherty and Crumrine |
Western Asset and Flaherty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Flaherty
The main advantage of trading using opposite Western Asset and Flaherty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Flaherty 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 Flaherty will offset losses from the drop in Flaherty's long position.| Western Asset vs. Western Asset High | Western Asset vs. Western Asset High | Western Asset vs. Blackrock Debt Strategies | Western Asset vs. Western Asset Diversified |
| Flaherty vs. Tekla World Healthcare | Flaherty vs. Tekla Healthcare Investors | Flaherty vs. Tekla Life Sciences | Flaherty vs. Cohen And Steers |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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