Correlation Between Western Asset and Alternative Credit
Can any of the company-specific risk be diversified away by investing in both Western Asset and Alternative Credit 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 Alternative Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Premier and Alternative Credit Income, you can compare the effects of market volatilities on Western Asset and Alternative Credit 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 Alternative Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Alternative Credit.
Diversification Opportunities for Western Asset and Alternative Credit
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Alternative is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Premier and Alternative Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Credit Income 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 Premier are associated (or correlated) with Alternative Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Credit Income has no effect on the direction of Western Asset i.e., Western Asset and Alternative Credit go up and down completely randomly.
Pair Corralation between Western Asset and Alternative Credit
If you would invest 973.00 in Alternative Credit Income on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Alternative Credit Income or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Premier vs. Alternative Credit Income
Performance |
| Timeline |
| Western Asset Premier |
| Alternative Credit Income |
Western Asset and Alternative Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Alternative Credit
The main advantage of trading using opposite Western Asset and Alternative Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Alternative Credit 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 Alternative Credit will offset losses from the drop in Alternative Credit's long position.| Western Asset vs. Angel Oak Multi Strategy | Western Asset vs. T Rowe Price | Western Asset vs. Dodge Cox Emerging | Western Asset vs. T Rowe Price |
| Alternative Credit vs. Aig Government Money | Alternative Credit vs. Blackrock Government Bond | Alternative Credit vs. Dws Government Money | Alternative Credit vs. Franklin Adjustable Government |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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