Correlation Between Western Asset and Abbey Capital
Can any of the company-specific risk be diversified away by investing in both Western Asset and Abbey Capital 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 Abbey Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Short and Abbey Capital Futures, you can compare the effects of market volatilities on Western Asset and Abbey Capital 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 Abbey Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Abbey Capital.
Diversification Opportunities for Western Asset and Abbey Capital
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Abbey is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Short and Abbey Capital Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbey Capital Futures 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 Short are associated (or correlated) with Abbey Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbey Capital Futures has no effect on the direction of Western Asset i.e., Western Asset and Abbey Capital go up and down completely randomly.
Pair Corralation between Western Asset and Abbey Capital
Assuming the 90 days horizon Western Asset Short is expected to generate 0.33 times more return on investment than Abbey Capital. However, Western Asset Short is 3.03 times less risky than Abbey Capital. It trades about 0.14 of its potential returns per unit of risk. Abbey Capital Futures is currently generating about 0.03 per unit of risk. If you would invest 483.00 in Western Asset Short on November 2, 2024 and sell it today you would earn a total of 2.00 from holding Western Asset Short or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Short vs. Abbey Capital Futures
Performance |
| Timeline |
| Western Asset Short |
| Abbey Capital Futures |
Western Asset and Abbey Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Abbey Capital
The main advantage of trading using opposite Western Asset and Abbey Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Abbey Capital 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 Abbey Capital will offset losses from the drop in Abbey Capital's long position.| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
| Abbey Capital vs. Ab Bond Inflation | Abbey Capital vs. Ab Bond Inflation | Abbey Capital vs. Short Duration Inflation | Abbey Capital vs. Ab Bond Inflation |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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