Correlation Between Western Asset and T Rowe
Can any of the company-specific risk be diversified away by investing in both Western Asset and T Rowe 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 T Rowe 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 T Rowe Price, you can compare the effects of market volatilities on Western Asset and T Rowe 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 T Rowe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and T Rowe.
Diversification Opportunities for Western Asset and T Rowe
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and TBLLX is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and T Rowe Price in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Rowe Price 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 T Rowe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Rowe Price has no effect on the direction of Western Asset i.e., Western Asset and T Rowe go up and down completely randomly.
Pair Corralation between Western Asset and T Rowe
Assuming the 90 days horizon Western Asset is expected to generate 7.11 times less return on investment than T Rowe. But when comparing it to its historical volatility, Western Asset Inflation is 1.83 times less risky than T Rowe. It trades about 0.03 of its potential returns per unit of risk. T Rowe Price is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 802.00 in T Rowe Price on September 13, 2024 and sell it today you would earn a total of 363.00 from holding T Rowe Price or generate 45.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Western Asset Inflation vs. T Rowe Price
Performance |
| Timeline |
| Western Asset Inflation |
| T Rowe Price |
Western Asset and T Rowe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and T Rowe
The main advantage of trading using opposite Western Asset and T Rowe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, T Rowe 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 T Rowe will offset losses from the drop in T Rowe's long position.| Western Asset vs. Dimensional Retirement Income | Western Asset vs. Sierra E Retirement | Western Asset vs. Fidelity Managed Retirement | Western Asset vs. Saat Moderate Strategy |
| T Rowe vs. Western Asset Inflation | T Rowe vs. Goldman Sachs Inflation | T Rowe vs. American Funds Inflation | T Rowe vs. Lord Abbett Inflation |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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