Correlation Between Western Asset and Nuveen Preferred
Can any of the company-specific risk be diversified away by investing in both Western Asset and Nuveen Preferred 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 Nuveen Preferred 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 Nuveen Preferred and, you can compare the effects of market volatilities on Western Asset and Nuveen Preferred 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 Nuveen Preferred. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Nuveen Preferred.
Diversification Opportunities for Western Asset and Nuveen Preferred
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Nuveen is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Nuveen Preferred and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Preferred 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 Nuveen Preferred. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Preferred has no effect on the direction of Western Asset i.e., Western Asset and Nuveen Preferred go up and down completely randomly.
Pair Corralation between Western Asset and Nuveen Preferred
Considering the 90-day investment horizon Western Asset is expected to generate 1.98 times less return on investment than Nuveen Preferred. In addition to that, Western Asset is 1.11 times more volatile than Nuveen Preferred and. It trades about 0.03 of its total potential returns per unit of risk. Nuveen Preferred and is currently generating about 0.06 per unit of volatility. If you would invest 1,651 in Nuveen Preferred and on August 28, 2024 and sell it today you would earn a total of 400.00 from holding Nuveen Preferred and or generate 24.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. Nuveen Preferred and
Performance |
| Timeline |
| Western Asset Investment |
| Nuveen Preferred |
Western Asset and Nuveen Preferred Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Nuveen Preferred
The main advantage of trading using opposite Western Asset and Nuveen Preferred positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Nuveen Preferred 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 Nuveen Preferred will offset losses from the drop in Nuveen Preferred's long position.| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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