Correlation Between Ultra-short Fixed and Western Asset
Can any of the company-specific risk be diversified away by investing in both Ultra-short Fixed 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 Ultra-short Fixed and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Short Fixed Income and Western Asset Inflation, you can compare the effects of market volatilities on Ultra-short Fixed 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 Ultra-short Fixed with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra-short Fixed and Western Asset.
Diversification Opportunities for Ultra-short Fixed and Western Asset
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ultra-short and Western is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Short Fixed Income and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation and Ultra-short Fixed 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 Ultra Short Fixed Income 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 Inflation has no effect on the direction of Ultra-short Fixed i.e., Ultra-short Fixed and Western Asset go up and down completely randomly.
Pair Corralation between Ultra-short Fixed and Western Asset
Assuming the 90 days horizon Ultra Short Fixed Income is expected to generate 0.23 times more return on investment than Western Asset. However, Ultra Short Fixed Income is 4.44 times less risky than Western Asset. It trades about 0.25 of its potential returns per unit of risk. Western Asset Inflation is currently generating about 0.02 per unit of risk. If you would invest 922.00 in Ultra Short Fixed Income on September 2, 2024 and sell it today you would earn a total of 109.00 from holding Ultra Short Fixed Income or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Short Fixed Income vs. Western Asset Inflation
Performance |
| Timeline |
| Ultra Short Fixed |
| Western Asset Inflation |
Ultra-short Fixed and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra-short Fixed and Western Asset
The main advantage of trading using opposite Ultra-short Fixed and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra-short Fixed 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.| Ultra-short Fixed vs. Chartwell Short Duration | Ultra-short Fixed vs. Old Westbury Short Term | Ultra-short Fixed vs. Goldman Sachs Short Term | Ultra-short Fixed vs. Siit Ultra Short |
| Western Asset vs. Prudential Health Sciences | Western Asset vs. The Gabelli Healthcare | Western Asset vs. Delaware Healthcare Fund | Western Asset vs. Blackrock Health Sciences |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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