Correlation Between Western Asset and Alliancebernstein
Can any of the company-specific risk be diversified away by investing in both Western Asset and Alliancebernstein 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 Alliancebernstein 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 Alliancebernstein Global High, you can compare the effects of market volatilities on Western Asset and Alliancebernstein 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 Alliancebernstein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Alliancebernstein.
Diversification Opportunities for Western Asset and Alliancebernstein
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Alliancebernstein is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Alliancebernstein Global High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliancebernstein 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 Alliancebernstein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliancebernstein has no effect on the direction of Western Asset i.e., Western Asset and Alliancebernstein go up and down completely randomly.
Pair Corralation between Western Asset and Alliancebernstein
Assuming the 90 days horizon Western Asset is expected to generate 1.47 times less return on investment than Alliancebernstein. But when comparing it to its historical volatility, Western Asset High is 2.12 times less risky than Alliancebernstein. It trades about 0.11 of its potential returns per unit of risk. Alliancebernstein Global High is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 845.00 in Alliancebernstein Global High on August 26, 2024 and sell it today you would earn a total of 247.00 from holding Alliancebernstein Global High or generate 29.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Alliancebernstein Global High
Performance |
| Timeline |
| Western Asset High |
| Alliancebernstein |
Western Asset and Alliancebernstein Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Alliancebernstein
The main advantage of trading using opposite Western Asset and Alliancebernstein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Alliancebernstein 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 Alliancebernstein will offset losses from the drop in Alliancebernstein's long position.| Western Asset vs. Legg Mason Bw | Western Asset vs. Alternative Asset Allocation | Western Asset vs. Enhanced Large Pany | Western Asset vs. Falcon Focus Scv |
| Alliancebernstein vs. Doubleline Yield Opportunities | Alliancebernstein vs. Highland Floating Rate | Alliancebernstein vs. Doubleline Opportunistic Credit | Alliancebernstein vs. Western Asset Emerging |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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