Correlation Between Moderate Balanced and Western Asset
Can any of the company-specific risk be diversified away by investing in both Moderate Balanced 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 Moderate Balanced and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Moderate Balanced Allocation and Western Asset Municipal, you can compare the effects of market volatilities on Moderate Balanced 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 Moderate Balanced with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moderate Balanced and Western Asset.
Diversification Opportunities for Moderate Balanced and Western Asset
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MODERATE and Western is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Moderate Balanced Allocation and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and Moderate Balanced 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 Moderate Balanced Allocation 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 Municipal has no effect on the direction of Moderate Balanced i.e., Moderate Balanced and Western Asset go up and down completely randomly.
Pair Corralation between Moderate Balanced and Western Asset
Assuming the 90 days horizon Moderate Balanced Allocation is expected to generate 2.38 times more return on investment than Western Asset. However, Moderate Balanced is 2.38 times more volatile than Western Asset Municipal. It trades about 0.16 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.08 per unit of risk. If you would invest 1,184 in Moderate Balanced Allocation on October 25, 2024 and sell it today you would earn a total of 20.00 from holding Moderate Balanced Allocation or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Moderate Balanced Allocation vs. Western Asset Municipal
Performance |
| Timeline |
| Moderate Balanced |
| Western Asset Municipal |
Moderate Balanced and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Moderate Balanced and Western Asset
The main advantage of trading using opposite Moderate Balanced and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moderate Balanced 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.| Moderate Balanced vs. Americafirst Monthly Risk On | Moderate Balanced vs. Virtus High Yield | Moderate Balanced vs. Aggressive Balanced Allocation | Moderate Balanced vs. Ab High Income |
| Western Asset vs. Moderate Balanced Allocation | Western Asset vs. Jp Morgan Smartretirement | Western Asset vs. Voya Target Retirement | Western Asset vs. Calvert Moderate Allocation |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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