Correlation Between Western Asset and Nuveen New
Can any of the company-specific risk be diversified away by investing in both Western Asset and Nuveen New 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 Nuveen New 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 Nuveen New York, you can compare the effects of market volatilities on Western Asset and Nuveen New 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 Nuveen New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Nuveen New.
Diversification Opportunities for Western Asset and Nuveen New
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Nuveen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Nuveen New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen New York 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 Nuveen New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen New York has no effect on the direction of Western Asset i.e., Western Asset and Nuveen New go up and down completely randomly.
Pair Corralation between Western Asset and Nuveen New
Considering the 90-day investment horizon Western Asset Managed is expected to generate 1.26 times more return on investment than Nuveen New. However, Western Asset is 1.26 times more volatile than Nuveen New York. It trades about 0.06 of its potential returns per unit of risk. Nuveen New York is currently generating about 0.08 per unit of risk. If you would invest 915.00 in Western Asset Managed on August 26, 2024 and sell it today you would earn a total of 129.00 from holding Western Asset Managed or generate 14.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Managed vs. Nuveen New York
Performance |
| Timeline |
| Western Asset Managed |
| Nuveen New York |
Western Asset and Nuveen New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Nuveen New
The main advantage of trading using opposite Western Asset and Nuveen New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Nuveen New 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 Nuveen New will offset losses from the drop in Nuveen New's long position.| Western Asset vs. DTF Tax Free | Western Asset vs. MFS High Yield | Western Asset vs. MFS High Income | Western Asset vs. John Hancock Income |
| Nuveen New vs. Eaton Vance National | Nuveen New vs. Invesco High Income | Nuveen New vs. Nuveen California Select | Nuveen New vs. MFS Investment Grade |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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