Correlation Between Western Asset and Munivest Fund
Can any of the company-specific risk be diversified away by investing in both Western Asset and Munivest Fund 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 Munivest Fund 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 Munivest Fund, you can compare the effects of market volatilities on Western Asset and Munivest Fund 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 Munivest Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Munivest Fund.
Diversification Opportunities for Western Asset and Munivest Fund
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and Munivest is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Munivest Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Munivest Fund 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 Munivest Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Munivest Fund has no effect on the direction of Western Asset i.e., Western Asset and Munivest Fund go up and down completely randomly.
Pair Corralation between Western Asset and Munivest Fund
Considering the 90-day investment horizon Western Asset Managed is expected to generate 0.79 times more return on investment than Munivest Fund. However, Western Asset Managed is 1.27 times less risky than Munivest Fund. It trades about 0.1 of its potential returns per unit of risk. Munivest Fund is currently generating about 0.05 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. Munivest Fund
Performance |
| Timeline |
| Western Asset Managed |
| Munivest Fund |
Western Asset and Munivest Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Munivest Fund
The main advantage of trading using opposite Western Asset and Munivest Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Munivest Fund 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 Munivest Fund will offset losses from the drop in Munivest Fund'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 |
| Munivest Fund vs. DTF Tax Free | Munivest Fund vs. MFS High Yield | Munivest Fund vs. MFS High Income | Munivest Fund vs. John Hancock Income |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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