Correlation Between Inflation Protected and Western Asset
Can any of the company-specific risk be diversified away by investing in both Inflation Protected and Western Asset 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 Inflation Protected and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Inflation Protected Bond Fund and Western Asset Pennsylvania, you can compare the effects of market volatilities on Inflation Protected and Western Asset 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 Inflation Protected with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inflation Protected and Western Asset.
Diversification Opportunities for Inflation Protected and Western Asset
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Inflation and Western is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Inflation Protected Bond Fund and Western Asset Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Pennsy and Inflation Protected 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 Inflation Protected Bond Fund are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Pennsy has no effect on the direction of Inflation Protected i.e., Inflation Protected and Western Asset go up and down completely randomly.
Pair Corralation between Inflation Protected and Western Asset
Assuming the 90 days horizon Inflation Protected Bond Fund is expected to generate 1.85 times more return on investment than Western Asset. However, Inflation Protected is 1.85 times more volatile than Western Asset Pennsylvania. It trades about 0.07 of its potential returns per unit of risk. Western Asset Pennsylvania is currently generating about 0.06 per unit of risk. If you would invest 919.00 in Inflation Protected Bond Fund on September 3, 2024 and sell it today you would earn a total of 137.00 from holding Inflation Protected Bond Fund or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Inflation Protected Bond Fund vs. Western Asset Pennsylvania
Performance |
| Timeline |
| Inflation Protected |
| Western Asset Pennsy |
Inflation Protected and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inflation Protected and Western Asset
The main advantage of trading using opposite Inflation Protected and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inflation Protected position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Inflation Protected vs. First American Funds | Inflation Protected vs. Hsbc Treasury Money | Inflation Protected vs. Janus Investment | Inflation Protected vs. General Money Market |
| Western Asset vs. First American Funds | Western Asset vs. John Hancock Money | Western Asset vs. Prudential Government Money | Western Asset vs. Franklin Government Money |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |