Correlation Between Western Asset and New America
Can any of the company-specific risk be diversified away by investing in both Western Asset and New America 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 New America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and New America High, you can compare the effects of market volatilities on Western Asset and New America 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 New America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and New America.
Diversification Opportunities for Western Asset and New America
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and New is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and New America High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New America High 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 Investment are associated (or correlated) with New America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New America High has no effect on the direction of Western Asset i.e., Western Asset and New America go up and down completely randomly.
Pair Corralation between Western Asset and New America
Considering the 90-day investment horizon Western Asset Investment is expected to under-perform the New America. In addition to that, Western Asset is 1.26 times more volatile than New America High. It trades about -0.25 of its total potential returns per unit of risk. New America High is currently generating about 0.03 per unit of volatility. If you would invest 825.00 in New America High on August 31, 2024 and sell it today you would earn a total of 4.00 from holding New America High or generate 0.48% 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 Investment vs. New America High
Performance |
| Timeline |
| Western Asset Investment |
| New America High |
Western Asset and New America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and New America
The main advantage of trading using opposite Western Asset and New America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, New America 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 New America will offset losses from the drop in New America's long position.| Western Asset vs. HUMANA INC | Western Asset vs. SCOR PK | Western Asset vs. Aquagold International | Western Asset vs. Thrivent High Yield |
| New America vs. Pioneer Municipal High | New America vs. DWS Municipal Income | New America vs. RiverNorth Specialty Finance | New America vs. Putnam Managed Municipal |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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