Correlation Between Western Asset and Vident Core
Can any of the company-specific risk be diversified away by investing in both Western Asset and Vident Core 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 Vident Core 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 Vident Core Bond, you can compare the effects of market volatilities on Western Asset and Vident Core 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 Vident Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Vident Core.
Diversification Opportunities for Western Asset and Vident Core
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Vident is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Total and Vident Core Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vident Core Bond 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 Vident Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vident Core Bond has no effect on the direction of Western Asset i.e., Western Asset and Vident Core go up and down completely randomly.
Pair Corralation between Western Asset and Vident Core
Given the investment horizon of 90 days Western Asset Total is expected to generate 1.29 times more return on investment than Vident Core. However, Western Asset is 1.29 times more volatile than Vident Core Bond. It trades about 0.1 of its potential returns per unit of risk. Vident Core Bond is currently generating about 0.08 per unit of risk. If you would invest 1,953 in Western Asset Total on November 3, 2024 and sell it today you would earn a total of 15.00 from holding Western Asset Total or generate 0.77% 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. Vident Core Bond
Performance |
| Timeline |
| Western Asset Total |
| Vident Core Bond |
Western Asset and Vident Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Vident Core
The main advantage of trading using opposite Western Asset and Vident Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Vident Core 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 Vident Core will offset losses from the drop in Vident Core's long position.| Western Asset vs. Western Asset Short | Western Asset vs. iShares ESG USD | Western Asset vs. VictoryShares Multi Factor Minimum | Western Asset vs. ClearBridge Dividend Strategy |
| Vident Core vs. Vident Core Equity | Vident Core vs. Vident International Equity | Vident Core vs. Invesco Variable Rate | Vident Core vs. FlexShares Credit Scored Corporate |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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