Correlation Between Western Asset and Western Asset
Can any of the company-specific risk be diversified away by investing in both Western Asset and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Total and Western Asset Managed, you can compare the effects of market volatilities on Western Asset and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Western Asset.
Diversification Opportunities for Western Asset and Western Asset
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WESTERN and Western is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Total and Western Asset Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Managed 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 Total are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Managed has no effect on the direction of Western Asset i.e., Western Asset and Western Asset go up and down completely randomly.
Pair Corralation between Western Asset and Western Asset
Assuming the 90 days horizon Western Asset Total is expected to generate 0.94 times more return on investment than Western Asset. However, Western Asset Total is 1.06 times less risky than Western Asset. It trades about 0.15 of its potential returns per unit of risk. Western Asset Managed is currently generating about 0.11 per unit of risk. If you would invest 879.00 in Western Asset Total on September 3, 2024 and sell it today you would earn a total of 35.00 from holding Western Asset Total or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Total vs. Western Asset Managed
Performance |
| Timeline |
| Western Asset Total |
| Western Asset Managed |
Western Asset and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Western Asset
The main advantage of trading using opposite Western Asset and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Western Asset vs. Ultra Short Fixed Income | Western Asset vs. The Fixed Income | Western Asset vs. Sarofim Equity | Western Asset vs. Ab Select Equity |
| Western Asset vs. Vanguard Long Term Tax Exempt | Western Asset vs. Vanguard High Yield Tax Exempt | Western Asset vs. Franklin Federal Tax Free | Western Asset vs. Franklin Federal Tax Free |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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