Correlation Between Western Asset and Federated Premier
Can any of the company-specific risk be diversified away by investing in both Western Asset and Federated Premier 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 Federated Premier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Managed and Federated Premier Municipal, you can compare the effects of market volatilities on Western Asset and Federated Premier 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 Federated Premier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Federated Premier.
Diversification Opportunities for Western Asset and Federated Premier
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and Federated is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Federated Premier Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Premier 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 Managed are associated (or correlated) with Federated Premier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Premier has no effect on the direction of Western Asset i.e., Western Asset and Federated Premier go up and down completely randomly.
Pair Corralation between Western Asset and Federated Premier
Considering the 90-day investment horizon Western Asset Managed is expected to generate 0.76 times more return on investment than Federated Premier. However, Western Asset Managed is 1.32 times less risky than Federated Premier. It trades about 0.1 of its potential returns per unit of risk. Federated Premier Municipal is currently generating about -0.14 per unit of risk. If you would invest 1,031 in Western Asset Managed on August 26, 2024 and sell it today you would earn a total of 13.00 from holding Western Asset Managed or generate 1.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Managed vs. Federated Premier Municipal
Performance |
| Timeline |
| Western Asset Managed |
| Federated Premier |
Western Asset and Federated Premier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Federated Premier
The main advantage of trading using opposite Western Asset and Federated Premier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Federated Premier 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 Federated Premier will offset losses from the drop in Federated Premier's long position.| Western Asset vs. Western Asset Municipal | Western Asset vs. Blackrock Muniholdings Quality | Western Asset vs. DTF Tax Free | Western Asset vs. John Hancock Income |
| Federated Premier vs. Dws Strategic Municipal | Federated Premier vs. MFS Investment Grade | Federated Premier vs. Eaton Vance Municipal | Federated Premier vs. DTF Tax Free |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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