Correlation Between Western Asset and Boston Mon
Can any of the company-specific risk be diversified away by investing in both Western Asset and Boston Mon 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 Boston Mon 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 Boston Mon Equity, you can compare the effects of market volatilities on Western Asset and Boston Mon 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 Boston Mon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Boston Mon.
Diversification Opportunities for Western Asset and Boston Mon
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Boston is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Boston Mon Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Mon Equity 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 Boston Mon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Mon Equity has no effect on the direction of Western Asset i.e., Western Asset and Boston Mon go up and down completely randomly.
Pair Corralation between Western Asset and Boston Mon
Assuming the 90 days horizon Western Asset is expected to generate 7.48 times less return on investment than Boston Mon. But when comparing it to its historical volatility, Western Asset High is 4.57 times less risky than Boston Mon. It trades about 0.11 of its potential returns per unit of risk. Boston Mon Equity is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 7,450 in Boston Mon Equity on September 13, 2024 and sell it today you would earn a total of 165.00 from holding Boston Mon Equity or generate 2.21% 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. Boston Mon Equity
Performance |
| Timeline |
| Western Asset High |
| Boston Mon Equity |
Western Asset and Boston Mon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Boston Mon
The main advantage of trading using opposite Western Asset and Boston Mon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Boston Mon 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 Boston Mon will offset losses from the drop in Boston Mon's long position.| Western Asset vs. Guggenheim Risk Managed | Western Asset vs. Simt Real Estate | Western Asset vs. Redwood Real Estate | Western Asset vs. Vy Clarion Real |
| Boston Mon vs. Prudential Government Income | Boston Mon vs. Short Term Government Fund | Boston Mon vs. Franklin Adjustable Government | Boston Mon vs. Payden Government Fund |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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