Correlation Between Western Asset and Nuveen High
Can any of the company-specific risk be diversified away by investing in both Western Asset and Nuveen 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 Nuveen High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Managed and Nuveen High Yield, you can compare the effects of market volatilities on Western Asset and Nuveen 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 Nuveen High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Nuveen High.
Diversification Opportunities for Western Asset and Nuveen High
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Western and Nuveen is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Nuveen High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen 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 Managed are associated (or correlated) with Nuveen High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen High Yield has no effect on the direction of Western Asset i.e., Western Asset and Nuveen High go up and down completely randomly.
Pair Corralation between Western Asset and Nuveen High
Assuming the 90 days horizon Western Asset Managed is expected to generate 0.67 times more return on investment than Nuveen High. However, Western Asset Managed is 1.48 times less risky than Nuveen High. It trades about -0.11 of its potential returns per unit of risk. Nuveen High Yield is currently generating about -0.11 per unit of risk. If you would invest 1,475 in Western Asset Managed on January 18, 2025 and sell it today you would lose (34.00) from holding Western Asset Managed or give up 2.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Managed vs. Nuveen High Yield
Performance |
| Timeline |
| Western Asset Managed |
| Nuveen High Yield |
Western Asset and Nuveen High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Nuveen High
The main advantage of trading using opposite Western Asset and Nuveen High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Nuveen 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 Nuveen High will offset losses from the drop in Nuveen High's long position.| Western Asset vs. Vanguard Long Term Tax Exempt | Western Asset vs. Vanguard High Yield Tax Exempt | Western Asset vs. Vanguard High Yield Tax Exempt | Western Asset vs. Vanguard Long Term Tax Exempt |
| Nuveen High vs. Oppenheimer Roc High | Nuveen High vs. Nuveen All American Municipal | Nuveen High vs. Nuveen Short Duration High | Nuveen High vs. Nuveen High Yield |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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