Correlation Between Western Asset and Global Infrastructure
Can any of the company-specific risk be diversified away by investing in both Western Asset and Global Infrastructure 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 Global Infrastructure 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 Global Infrastructure Fund, you can compare the effects of market volatilities on Western Asset and Global Infrastructure 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 Global Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Global Infrastructure.
Diversification Opportunities for Western Asset and Global Infrastructure
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Global is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and Global Infrastructure Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Infrastructure 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 Global Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Infrastructure has no effect on the direction of Western Asset i.e., Western Asset and Global Infrastructure go up and down completely randomly.
Pair Corralation between Western Asset and Global Infrastructure
Assuming the 90 days horizon Western Asset Inflation is expected to under-perform the Global Infrastructure. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Inflation is 2.04 times less risky than Global Infrastructure. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Global Infrastructure Fund is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 957.00 in Global Infrastructure Fund on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Global Infrastructure Fund or generate 0.52% 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. Global Infrastructure Fund
Performance |
| Timeline |
| Western Asset Inflation |
| Global Infrastructure |
Western Asset and Global Infrastructure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Global Infrastructure
The main advantage of trading using opposite Western Asset and Global Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Global Infrastructure 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 Global Infrastructure will offset losses from the drop in Global Infrastructure's 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 |
| Global Infrastructure vs. Qs Large Cap | Global Infrastructure vs. Americafirst Large Cap | Global Infrastructure vs. Avantis Large Cap | Global Infrastructure vs. Qs Large Cap |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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