Correlation Between Western Asset and Arbitrage Event
Can any of the company-specific risk be diversified away by investing in both Western Asset and Arbitrage Event 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 Arbitrage Event into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and The Arbitrage Event Driven, you can compare the effects of market volatilities on Western Asset and Arbitrage Event 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 Arbitrage Event. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Arbitrage Event.
Diversification Opportunities for Western Asset and Arbitrage Event
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Arbitrage is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and The Arbitrage Event Driven in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Event 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 Inflation are associated (or correlated) with Arbitrage Event. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Event has no effect on the direction of Western Asset i.e., Western Asset and Arbitrage Event go up and down completely randomly.
Pair Corralation between Western Asset and Arbitrage Event
Assuming the 90 days horizon Western Asset Inflation is expected to generate 1.36 times more return on investment than Arbitrage Event. However, Western Asset is 1.36 times more volatile than The Arbitrage Event Driven. It trades about 0.2 of its potential returns per unit of risk. The Arbitrage Event Driven is currently generating about 0.05 per unit of risk. If you would invest 929.00 in Western Asset Inflation on November 27, 2024 and sell it today you would earn a total of 9.00 from holding Western Asset Inflation or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. The Arbitrage Event Driven
Performance |
| Timeline |
| Western Asset Inflation |
| Arbitrage Event |
Western Asset and Arbitrage Event Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Arbitrage Event
The main advantage of trading using opposite Western Asset and Arbitrage Event positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Arbitrage Event 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 Arbitrage Event will offset losses from the drop in Arbitrage Event's long position.| Western Asset vs. Prudential High Yield | Western Asset vs. Pace High Yield | Western Asset vs. Gmo High Yield | Western Asset vs. Dunham High Yield |
| Arbitrage Event vs. Harbor Vertible Securities | Arbitrage Event vs. Forum Funds | Arbitrage Event vs. The Gamco Global | Arbitrage Event vs. Victory Incore Investment |
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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