Correlation Between Western Asset and Aam Select
Can any of the company-specific risk be diversified away by investing in both Western Asset and Aam Select 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 Aam Select 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 Aam Select Income, you can compare the effects of market volatilities on Western Asset and Aam Select 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 Aam Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Aam Select.
Diversification Opportunities for Western Asset and Aam Select
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Aam is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Aam Select Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aam Select Income 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 Aam Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aam Select Income has no effect on the direction of Western Asset i.e., Western Asset and Aam Select go up and down completely randomly.
Pair Corralation between Western Asset and Aam Select
Assuming the 90 days horizon Western Asset High is expected to generate 0.53 times more return on investment than Aam Select. However, Western Asset High is 1.89 times less risky than Aam Select. It trades about 0.2 of its potential returns per unit of risk. Aam Select Income is currently generating about -0.02 per unit of risk. If you would invest 693.00 in Western Asset High on September 3, 2024 and sell it today you would earn a total of 15.00 from holding Western Asset High or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Aam Select Income
Performance |
| Timeline |
| Western Asset High |
| Aam Select Income |
Western Asset and Aam Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Aam Select
The main advantage of trading using opposite Western Asset and Aam Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Aam Select 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 Aam Select will offset losses from the drop in Aam Select's long position.| Western Asset vs. Oklahoma College Savings | Western Asset vs. Massmutual Select Diversified | Western Asset vs. Jpmorgan Emerging Markets | Western Asset vs. Locorr Market Trend |
| Aam Select vs. Needham Aggressive Growth | Aam Select vs. Western Asset High | Aam Select vs. Gmo High Yield | Aam Select vs. Nuveen High Income |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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