Correlation Between Western Asset and Invesco Advantage
Can any of the company-specific risk be diversified away by investing in both Western Asset and Invesco Advantage 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 Advantage 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 Advantage MIT, you can compare the effects of market volatilities on Western Asset and Invesco Advantage 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 Advantage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Invesco Advantage.
Diversification Opportunities for Western Asset and Invesco Advantage
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Invesco is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Invesco Advantage MIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Advantage MIT 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 Advantage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Advantage MIT has no effect on the direction of Western Asset i.e., Western Asset and Invesco Advantage go up and down completely randomly.
Pair Corralation between Western Asset and Invesco Advantage
Considering the 90-day investment horizon Western Asset is expected to generate 1.13 times less return on investment than Invesco Advantage. But when comparing it to its historical volatility, Western Asset Managed is 1.04 times less risky than Invesco Advantage. It trades about 0.04 of its potential returns per unit of risk. Invesco Advantage MIT is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 787.00 in Invesco Advantage MIT on August 26, 2024 and sell it today you would earn a total of 106.00 from holding Invesco Advantage MIT or generate 13.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Managed vs. Invesco Advantage MIT
Performance |
| Timeline |
| Western Asset Managed |
| Invesco Advantage MIT |
Western Asset and Invesco Advantage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Invesco Advantage
The main advantage of trading using opposite Western Asset and Invesco Advantage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Invesco Advantage 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 Advantage will offset losses from the drop in Invesco Advantage'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 |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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