Correlation Between Longleaf Partners and Western Asset
Can any of the company-specific risk be diversified away by investing in both Longleaf Partners 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 Longleaf Partners and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longleaf Partners Fund and Western Asset Intermediate, you can compare the effects of market volatilities on Longleaf Partners 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 Longleaf Partners with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longleaf Partners and Western Asset.
Diversification Opportunities for Longleaf Partners and Western Asset
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Longleaf and Western is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Fund and Western Asset Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Interm and Longleaf Partners 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 Longleaf Partners 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 Interm has no effect on the direction of Longleaf Partners i.e., Longleaf Partners and Western Asset go up and down completely randomly.
Pair Corralation between Longleaf Partners and Western Asset
Assuming the 90 days horizon Longleaf Partners Fund is expected to generate 2.32 times more return on investment than Western Asset. However, Longleaf Partners is 2.32 times more volatile than Western Asset Intermediate. It trades about 0.08 of its potential returns per unit of risk. Western Asset Intermediate is currently generating about 0.08 per unit of risk. If you would invest 2,549 in Longleaf Partners Fund on August 28, 2024 and sell it today you would earn a total of 31.00 from holding Longleaf Partners Fund or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longleaf Partners Fund vs. Western Asset Intermediate
Performance |
| Timeline |
| Longleaf Partners |
| Western Asset Interm |
Longleaf Partners and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longleaf Partners and Western Asset
The main advantage of trading using opposite Longleaf Partners and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners 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.| Longleaf Partners vs. Longleaf Partners Global | Longleaf Partners vs. Longleaf Partners Small Cap | Longleaf Partners vs. Northern Institutional Funds | Longleaf Partners vs. Dreyfus Yield Enhancement |
| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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