Correlation Between Western Asset and XAI Octagon
Can any of the company-specific risk be diversified away by investing in both Western Asset and XAI Octagon 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 XAI Octagon 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 XAI Octagon Floating, you can compare the effects of market volatilities on Western Asset and XAI Octagon 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 XAI Octagon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and XAI Octagon.
Diversification Opportunities for Western Asset and XAI Octagon
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and XAI is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and XAI Octagon Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAI Octagon Floating 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 XAI Octagon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAI Octagon Floating has no effect on the direction of Western Asset i.e., Western Asset and XAI Octagon go up and down completely randomly.
Pair Corralation between Western Asset and XAI Octagon
Considering the 90-day investment horizon Western Asset High is expected to generate 1.75 times more return on investment than XAI Octagon. However, Western Asset is 1.75 times more volatile than XAI Octagon Floating. It trades about 0.04 of its potential returns per unit of risk. XAI Octagon Floating is currently generating about -0.01 per unit of risk. If you would invest 1,198 in Western Asset High on August 27, 2024 and sell it today you would earn a total of 6.00 from holding Western Asset High or generate 0.5% 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. XAI Octagon Floating
Performance |
| Timeline |
| Western Asset High |
| XAI Octagon Floating |
Western Asset and XAI Octagon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and XAI Octagon
The main advantage of trading using opposite Western Asset and XAI Octagon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, XAI Octagon 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 XAI Octagon will offset losses from the drop in XAI Octagon's long position.| Western Asset vs. Western Asset Global | Western Asset vs. Western Asset High | Western Asset vs. Voya Global Advantage | Western Asset vs. Voya Global Equity |
| XAI Octagon vs. Eagle Point Credit | XAI Octagon vs. Oxford Lane Capital | XAI Octagon vs. Priorityome Fund |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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