Correlation Between Western Asset and Western Asset
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Smash and Western Asset Intermediate Term, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Western Asset.
Diversification Opportunities for Western Asset and Western Asset
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Western is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Smash and Western Asset Intermediate Ter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Interm 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 Smash 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 Interm has no effect on the direction of Western Asset i.e., Western Asset and Western Asset go up and down completely randomly.
Pair Corralation between Western Asset and Western Asset
Assuming the 90 days horizon Western Asset Smash is expected to under-perform the Western Asset. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Smash is 1.17 times less risky than Western Asset. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Western Asset Intermediate Term is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 604.00 in Western Asset Intermediate Term on August 29, 2024 and sell it today you would earn a total of 7.00 from holding Western Asset Intermediate Term or generate 1.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Smash vs. Western Asset Intermediate Ter
Performance |
| Timeline |
| Western Asset Smash |
| Western Asset Interm |
Western Asset and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Western Asset
The main advantage of trading using opposite Western Asset and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. The Gabelli Small | Western Asset vs. T Rowe Price | Western Asset vs. Davenport Small Cap | Western Asset vs. Tiaa Cref Smallmid Cap Equity |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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