Correlation Between Tri Continental and Western Asset
Can any of the company-specific risk be diversified away by investing in both Tri Continental 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 Tri Continental and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tri Continental Closed and Western Asset Emerging, you can compare the effects of market volatilities on Tri Continental 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 Tri Continental with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Continental and Western Asset.
Diversification Opportunities for Tri Continental and Western Asset
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tri and Western is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Tri Continental Closed and Western Asset Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Emerging and Tri Continental 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 Tri Continental Closed 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 Emerging has no effect on the direction of Tri Continental i.e., Tri Continental and Western Asset go up and down completely randomly.
Pair Corralation between Tri Continental and Western Asset
Allowing for the 90-day total investment horizon Tri Continental Closed is expected to generate 0.86 times more return on investment than Western Asset. However, Tri Continental Closed is 1.16 times less risky than Western Asset. It trades about 0.36 of its potential returns per unit of risk. Western Asset Emerging is currently generating about 0.17 per unit of risk. If you would invest 3,274 in Tri Continental Closed on September 1, 2024 and sell it today you would earn a total of 174.00 from holding Tri Continental Closed or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tri Continental Closed vs. Western Asset Emerging
Performance |
| Timeline |
| Tri Continental Closed |
| Western Asset Emerging |
Tri Continental and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tri Continental and Western Asset
The main advantage of trading using opposite Tri Continental and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tri Continental 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.| Tri Continental vs. Eaton Vance Tax | Tri Continental vs. Blackrock Muniyield | Tri Continental vs. Eaton Vance Tax | Tri Continental vs. Eaton Vance Tax |
| Western Asset vs. Doubleline Yield Opportunities | Western Asset vs. Highland Floating Rate | Western Asset vs. Doubleline Opportunistic Credit | Western Asset vs. Alliancebernstein Global High |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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