Correlation Between Western Asset and Invesco California
Can any of the company-specific risk be diversified away by investing in both Western Asset and Invesco California 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 Invesco California 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 Invesco California Value, you can compare the effects of market volatilities on Western Asset and Invesco California 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 Invesco California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Invesco California.
Diversification Opportunities for Western Asset and Invesco California
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Invesco is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Invesco California Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco California Value 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 Invesco California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco California Value has no effect on the direction of Western Asset i.e., Western Asset and Invesco California go up and down completely randomly.
Pair Corralation between Western Asset and Invesco California
Considering the 90-day investment horizon Western Asset is expected to generate 1.02 times less return on investment than Invesco California. But when comparing it to its historical volatility, Western Asset Managed is 1.35 times less risky than Invesco California. It trades about 0.24 of its potential returns per unit of risk. Invesco California Value is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,018 in Invesco California Value on August 29, 2024 and sell it today you would earn a total of 36.00 from holding Invesco California Value or generate 3.54% 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. Invesco California Value
Performance |
| Timeline |
| Western Asset Managed |
| Invesco California Value |
Western Asset and Invesco California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Invesco California
The main advantage of trading using opposite Western Asset and Invesco California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Invesco California 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 Invesco California will offset losses from the drop in Invesco California's long position.| Western Asset vs. Gabelli Global Small | Western Asset vs. MFS Investment Grade | Western Asset vs. Eaton Vance National | Western Asset vs. GAMCO Natural Resources |
| Invesco California vs. Pimco California Municipal | Invesco California vs. Invesco Pennsylvania Value | Invesco California vs. Nuveen California Dividend | Invesco California vs. Invesco Advantage MIT |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |