Correlation Between Western Asset and Prudential High
Can any of the company-specific risk be diversified away by investing in both Western Asset and Prudential High 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 Prudential High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Intermediate Term and Prudential High Yield, you can compare the effects of market volatilities on Western Asset and Prudential High 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 Prudential High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Prudential High.
Diversification Opportunities for Western Asset and Prudential High
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Prudential is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Intermediate Ter and Prudential High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential High Yield 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 Intermediate Term are associated (or correlated) with Prudential High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential High Yield has no effect on the direction of Western Asset i.e., Western Asset and Prudential High go up and down completely randomly.
Pair Corralation between Western Asset and Prudential High
Assuming the 90 days horizon Western Asset Intermediate Term is expected to generate 1.12 times more return on investment than Prudential High. However, Western Asset is 1.12 times more volatile than Prudential High Yield. It trades about 0.29 of its potential returns per unit of risk. Prudential High Yield is currently generating about 0.08 per unit of risk. If you would invest 606.00 in Western Asset Intermediate Term on September 13, 2024 and sell it today you would earn a total of 5.00 from holding Western Asset Intermediate Term or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Intermediate Ter vs. Prudential High Yield
Performance |
| Timeline |
| Western Asset Interm |
| Prudential High Yield |
Western Asset and Prudential High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Prudential High
The main advantage of trading using opposite Western Asset and Prudential High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Prudential High 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 Prudential High will offset losses from the drop in Prudential High's long position.| Western Asset vs. Prudential High Yield | Western Asset vs. Blackrock High Yield | Western Asset vs. Gmo High Yield | Western Asset vs. Siit High Yield |
| Prudential High vs. Prudential Total Return | Prudential High vs. Metropolitan West Total | Prudential High vs. John Hancock Disciplined | Prudential High vs. Europacific Growth 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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