Correlation Between Oklahoma Municipal and Western Asset
Can any of the company-specific risk be diversified away by investing in both Oklahoma 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 Oklahoma 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 Oklahoma Municipal Fund and Western Asset Intermediate, you can compare the effects of market volatilities on Oklahoma 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 Oklahoma Municipal with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oklahoma Municipal and Western Asset.
Diversification Opportunities for Oklahoma Municipal and Western Asset
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oklahoma and Western is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Oklahoma Municipal Fund and Western Asset Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Interm and Oklahoma 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 Oklahoma 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 Interm has no effect on the direction of Oklahoma Municipal i.e., Oklahoma Municipal and Western Asset go up and down completely randomly.
Pair Corralation between Oklahoma Municipal and Western Asset
Assuming the 90 days horizon Oklahoma Municipal Fund is expected to generate 1.3 times more return on investment than Western Asset. However, Oklahoma Municipal is 1.3 times more volatile than Western Asset Intermediate. It trades about 0.22 of its potential returns per unit of risk. Western Asset Intermediate is currently generating about 0.09 per unit of risk. If you would invest 1,049 in Oklahoma Municipal Fund on September 1, 2024 and sell it today you would earn a total of 17.00 from holding Oklahoma Municipal Fund or generate 1.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oklahoma Municipal Fund vs. Western Asset Intermediate
Performance |
| Timeline |
| Oklahoma Municipal |
| Western Asset Interm |
Oklahoma Municipal and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oklahoma Municipal and Western Asset
The main advantage of trading using opposite Oklahoma Municipal and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oklahoma 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.| Oklahoma Municipal vs. Mesirow Financial Small | Oklahoma Municipal vs. Transamerica Financial Life | Oklahoma Municipal vs. 1919 Financial Services | Oklahoma Municipal vs. Angel Oak Financial |
| Western Asset vs. Nuveen Arizona Municipal | Western Asset vs. Transamerica Funds | Western Asset vs. T Rowe Price | Western Asset vs. Oklahoma Municipal Fund |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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