Correlation Between Western Asset and Abrdn Short
Can any of the company-specific risk be diversified away by investing in both Western Asset and Abrdn Short 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 Abrdn Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Abrdn Short Duration, you can compare the effects of market volatilities on Western Asset and Abrdn Short 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 Abrdn Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Abrdn Short.
Diversification Opportunities for Western Asset and Abrdn Short
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Abrdn is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Abrdn Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abrdn Short Duration 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 High are associated (or correlated) with Abrdn Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abrdn Short Duration has no effect on the direction of Western Asset i.e., Western Asset and Abrdn Short go up and down completely randomly.
Pair Corralation between Western Asset and Abrdn Short
Assuming the 90 days horizon Western Asset is expected to generate 1.28 times less return on investment than Abrdn Short. But when comparing it to its historical volatility, Western Asset High is 1.35 times less risky than Abrdn Short. It trades about 0.2 of its potential returns per unit of risk. Abrdn Short Duration is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 921.00 in Abrdn Short Duration on September 1, 2024 and sell it today you would earn a total of 7.00 from holding Abrdn Short Duration or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset High vs. Abrdn Short Duration
Performance |
| Timeline |
| Western Asset High |
| Abrdn Short Duration |
Western Asset and Abrdn Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Abrdn Short
The main advantage of trading using opposite Western Asset and Abrdn Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Abrdn Short 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 Abrdn Short will offset losses from the drop in Abrdn Short's long position.| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
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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 Stocks Directory module to find actively traded stocks across global markets.
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