Correlation Between Ab Municipal and Western Asset
Can any of the company-specific risk be diversified away by investing in both Ab Municipal 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 Ab Municipal and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Municipal Income and Western Asset Smash, you can compare the effects of market volatilities on Ab Municipal 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 Ab Municipal with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Western Asset.
Diversification Opportunities for Ab Municipal and Western Asset
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between MISHX and Western is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Income and Western Asset Smash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Smash and Ab Municipal 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 Ab Municipal Income 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 Smash has no effect on the direction of Ab Municipal i.e., Ab Municipal and Western Asset go up and down completely randomly.
Pair Corralation between Ab Municipal and Western Asset
Assuming the 90 days horizon Ab Municipal Income is expected to generate 1.35 times more return on investment than Western Asset. However, Ab Municipal is 1.35 times more volatile than Western Asset Smash. It trades about 0.14 of its potential returns per unit of risk. Western Asset Smash is currently generating about 0.03 per unit of risk. If you would invest 1,123 in Ab Municipal Income on August 28, 2024 and sell it today you would earn a total of 11.00 from holding Ab Municipal Income or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Municipal Income vs. Western Asset Smash
Performance |
| Timeline |
| Ab Municipal Income |
| Western Asset Smash |
Ab Municipal and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Western Asset
The main advantage of trading using opposite Ab Municipal and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal 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.| Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Minnesota Portfolio |
| Western Asset vs. Franklin Mutual Beacon | Western Asset vs. Templeton Developing Markets | Western Asset vs. Franklin Mutual Global | Western Asset vs. Franklin Mutual Global |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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