Correlation Between Western Asset and Pacific Funds
Can any of the company-specific risk be diversified away by investing in both Western Asset and Pacific Funds 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 Pacific Funds 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 Pacific Funds Floating, you can compare the effects of market volatilities on Western Asset and Pacific Funds 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 Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Pacific Funds.
Diversification Opportunities for Western Asset and Pacific Funds
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Pacific is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and Pacific Funds Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Floating 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Floating has no effect on the direction of Western Asset i.e., Western Asset and Pacific Funds go up and down completely randomly.
Pair Corralation between Western Asset and Pacific Funds
Assuming the 90 days horizon Western Asset Inflation is expected to generate 6.4 times more return on investment than Pacific Funds. However, Western Asset is 6.4 times more volatile than Pacific Funds Floating. It trades about 0.05 of its potential returns per unit of risk. Pacific Funds Floating is currently generating about 0.21 per unit of risk. If you would invest 938.00 in Western Asset Inflation on September 12, 2024 and sell it today you would earn a total of 3.00 from holding Western Asset Inflation or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset Inflation vs. Pacific Funds Floating
Performance |
| Timeline |
| Western Asset Inflation |
| Pacific Funds Floating |
Western Asset and Pacific Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Pacific Funds
The main advantage of trading using opposite Western Asset and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Pacific Funds 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 Pacific Funds will offset losses from the drop in Pacific Funds' long position.| Western Asset vs. Eventide Healthcare Life | Western Asset vs. Live Oak Health | Western Asset vs. Alger Health Sciences | Western Asset vs. Prudential Health Sciences |
| Pacific Funds vs. Virtus High Yield | Pacific Funds vs. Guggenheim High Yield | Pacific Funds vs. Artisan High Income | Pacific Funds vs. Gmo High Yield |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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