Correlation Between Ab Small and Western Asset
Can any of the company-specific risk be diversified away by investing in both Ab Small 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 Ab Small and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Small Cap and Western Asset Managed, you can compare the effects of market volatilities on Ab Small 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 Ab Small with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Small and Western Asset.
Diversification Opportunities for Ab Small and Western Asset
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between QUAZX and Western is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Ab Small Cap and Western Asset Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Managed and Ab Small 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 Ab Small Cap 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 Managed has no effect on the direction of Ab Small i.e., Ab Small and Western Asset go up and down completely randomly.
Pair Corralation between Ab Small and Western Asset
Assuming the 90 days horizon Ab Small Cap is expected to generate 5.19 times more return on investment than Western Asset. However, Ab Small is 5.19 times more volatile than Western Asset Managed. It trades about 0.05 of its potential returns per unit of risk. Western Asset Managed is currently generating about 0.05 per unit of risk. If you would invest 5,718 in Ab Small Cap on October 20, 2024 and sell it today you would earn a total of 2,004 from holding Ab Small Cap or generate 35.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Small Cap vs. Western Asset Managed
Performance |
| Timeline |
| Ab Small Cap |
| Western Asset Managed |
Ab Small and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Small and Western Asset
The main advantage of trading using opposite Ab Small and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Small 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.| Ab Small vs. Tiaa Cref High Yield Fund | Ab Small vs. Transamerica High Yield | Ab Small vs. Prudential High Yield | Ab Small vs. Janus High Yield Fund |
| Western Asset vs. Tax Managed Mid Small | Western Asset vs. Ab Small Cap | Western Asset vs. Praxis Small Cap | Western Asset vs. Hunter Small Cap |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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