Correlation Between Vaughan Nelson and Western Asset
Can any of the company-specific risk be diversified away by investing in both Vaughan Nelson 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 Vaughan Nelson and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vaughan Nelson Value and Western Asset High, you can compare the effects of market volatilities on Vaughan Nelson 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 Vaughan Nelson with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vaughan Nelson and Western Asset.
Diversification Opportunities for Vaughan Nelson and Western Asset
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vaughan and Western is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vaughan Nelson Value and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High and Vaughan Nelson 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 Vaughan Nelson Value 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 High has no effect on the direction of Vaughan Nelson i.e., Vaughan Nelson and Western Asset go up and down completely randomly.
Pair Corralation between Vaughan Nelson and Western Asset
Assuming the 90 days horizon Vaughan Nelson Value is expected to generate 6.76 times more return on investment than Western Asset. However, Vaughan Nelson is 6.76 times more volatile than Western Asset High. It trades about 0.25 of its potential returns per unit of risk. Western Asset High is currently generating about 0.06 per unit of risk. If you would invest 2,668 in Vaughan Nelson Value on September 3, 2024 and sell it today you would earn a total of 309.00 from holding Vaughan Nelson Value or generate 11.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vaughan Nelson Value vs. Western Asset High
Performance |
| Timeline |
| Vaughan Nelson Value |
| Western Asset High |
Vaughan Nelson and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vaughan Nelson and Western Asset
The main advantage of trading using opposite Vaughan Nelson and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vaughan Nelson 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.| Vaughan Nelson vs. Vanguard Mid Cap Index | Vaughan Nelson vs. Vanguard Mid Cap Index | Vaughan Nelson vs. Vanguard Mid Cap Index | Vaughan Nelson vs. Vanguard Mid Cap Index |
| Western Asset vs. Oklahoma College Savings | Western Asset vs. Massmutual Select Diversified | Western Asset vs. Jpmorgan Emerging Markets | Western Asset vs. Locorr Market Trend |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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