Correlation Between Western Asset and L Abbett
Can any of the company-specific risk be diversified away by investing in both Western Asset and L Abbett 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 L Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and L Abbett Fundamental, you can compare the effects of market volatilities on Western Asset and L Abbett 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 L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and L Abbett.
Diversification Opportunities for Western Asset and L Abbett
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and LAVVX is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and L Abbett Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Fundamental 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 Municipal are associated (or correlated) with L Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Abbett Fundamental has no effect on the direction of Western Asset i.e., Western Asset and L Abbett go up and down completely randomly.
Pair Corralation between Western Asset and L Abbett
Assuming the 90 days horizon Western Asset Municipal is expected to generate 0.38 times more return on investment than L Abbett. However, Western Asset Municipal is 2.61 times less risky than L Abbett. It trades about 0.12 of its potential returns per unit of risk. L Abbett Fundamental is currently generating about -0.03 per unit of risk. If you would invest 1,299 in Western Asset Municipal on September 14, 2024 and sell it today you would earn a total of 6.00 from holding Western Asset Municipal or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. L Abbett Fundamental
Performance |
| Timeline |
| Western Asset Municipal |
| L Abbett Fundamental |
Western Asset and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and L Abbett
The main advantage of trading using opposite Western Asset and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, L Abbett 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 L Abbett will offset losses from the drop in L Abbett's long position.| Western Asset vs. Queens Road Small | Western Asset vs. Fpa Queens Road | Western Asset vs. Fidelity Small Cap | Western Asset vs. Pace Smallmedium Value |
| L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Focused | L Abbett vs. Floating Rate 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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