Correlation Between Western Asset and Nuveen High
Can any of the company-specific risk be diversified away by investing in both Western Asset and Nuveen High 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 Nuveen High 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 Nuveen High Income, you can compare the effects of market volatilities on Western Asset and Nuveen High 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 Nuveen High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Nuveen High.
Diversification Opportunities for Western Asset and Nuveen High
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and NUVEEN is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Nuveen High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen High 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 Nuveen High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen High Income has no effect on the direction of Western Asset i.e., Western Asset and Nuveen High go up and down completely randomly.
Pair Corralation between Western Asset and Nuveen High
Assuming the 90 days horizon Western Asset is expected to generate 3.16 times less return on investment than Nuveen High. But when comparing it to its historical volatility, Western Asset High is 1.36 times less risky than Nuveen High. It trades about 0.15 of its potential returns per unit of risk. Nuveen High Income is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 666.00 in Nuveen High Income on September 3, 2024 and sell it today you would earn a total of 9.00 from holding Nuveen High Income or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Nuveen High Income
Performance |
| Timeline |
| Western Asset High |
| Nuveen High Income |
Western Asset and Nuveen High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Nuveen High
The main advantage of trading using opposite Western Asset and Nuveen High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Nuveen High 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 Nuveen High will offset losses from the drop in Nuveen High'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 |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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