Correlation Between Western Asset and Nuveen California
Can any of the company-specific risk be diversified away by investing in both Western Asset and Nuveen California 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 California 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 California High, you can compare the effects of market volatilities on Western Asset and Nuveen California 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 California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Nuveen California.
Diversification Opportunities for Western Asset and Nuveen California
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Nuveen is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Nuveen California High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen California High 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 California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen California High has no effect on the direction of Western Asset i.e., Western Asset and Nuveen California go up and down completely randomly.
Pair Corralation between Western Asset and Nuveen California
Assuming the 90 days horizon Western Asset is expected to generate 1.08 times less return on investment than Nuveen California. But when comparing it to its historical volatility, Western Asset High is 1.53 times less risky than Nuveen California. It trades about 0.2 of its potential returns per unit of risk. Nuveen California High is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 764.00 in Nuveen California High on September 3, 2024 and sell it today you would earn a total of 50.00 from holding Nuveen California High or generate 6.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Nuveen California High
Performance |
| Timeline |
| Western Asset High |
| Nuveen California High |
Western Asset and Nuveen California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Nuveen California
The main advantage of trading using opposite Western Asset and Nuveen California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Nuveen California 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 California will offset losses from the drop in Nuveen California's long position.| Western Asset vs. Lord Abbett Convertible | Western Asset vs. Allianzgi Convertible Income | Western Asset vs. Putnam Convertible Incm Gwth | Western Asset vs. Virtus Convertible |
| Nuveen California vs. Morningstar Aggressive Growth | Nuveen California vs. T Rowe Price | Nuveen California vs. Needham Aggressive Growth | Nuveen California vs. Western Asset High |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |