Correlation Between Nebraska Municipal and Western Asset
Can any of the company-specific risk be diversified away by investing in both Nebraska Municipal and Western Asset 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 Nebraska Municipal and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nebraska Municipal Fund and Western Asset E, you can compare the effects of market volatilities on Nebraska Municipal and Western Asset 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 Nebraska Municipal with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nebraska Municipal and Western Asset.
Diversification Opportunities for Nebraska Municipal and Western Asset
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nebraska and Western is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nebraska Municipal Fund and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E and Nebraska Municipal 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 Nebraska Municipal Fund are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of Nebraska Municipal i.e., Nebraska Municipal and Western Asset go up and down completely randomly.
Pair Corralation between Nebraska Municipal and Western Asset
Assuming the 90 days horizon Nebraska Municipal Fund is expected to generate 0.45 times more return on investment than Western Asset. However, Nebraska Municipal Fund is 2.22 times less risky than Western Asset. It trades about 0.04 of its potential returns per unit of risk. Western Asset E is currently generating about 0.02 per unit of risk. If you would invest 901.00 in Nebraska Municipal Fund on September 3, 2024 and sell it today you would earn a total of 42.00 from holding Nebraska Municipal Fund or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nebraska Municipal Fund vs. Western Asset E
Performance |
| Timeline |
| Nebraska Municipal |
| Western Asset E |
Nebraska Municipal and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nebraska Municipal and Western Asset
The main advantage of trading using opposite Nebraska Municipal and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nebraska Municipal position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Nebraska Municipal vs. Touchstone Ultra Short | Nebraska Municipal vs. Aqr Long Short Equity | Nebraska Municipal vs. Astor Longshort Fund | Nebraska Municipal vs. Quantitative Longshort Equity |
| Western Asset vs. Shelton Emerging Markets | Western Asset vs. Fundvantage Trust | Western Asset vs. Calamos Market Neutral | Western Asset vs. Legg Mason Partners |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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