Correlation Between Western Asset and Monroe Capital
Can any of the company-specific risk be diversified away by investing in both Western Asset and Monroe Capital 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 Monroe Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Monroe Capital Corp, you can compare the effects of market volatilities on Western Asset and Monroe Capital 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 Monroe Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Monroe Capital.
Diversification Opportunities for Western Asset and Monroe Capital
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Monroe is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Monroe Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monroe Capital Corp 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 Diversified are associated (or correlated) with Monroe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monroe Capital Corp has no effect on the direction of Western Asset i.e., Western Asset and Monroe Capital go up and down completely randomly.
Pair Corralation between Western Asset and Monroe Capital
Considering the 90-day investment horizon Western Asset Diversified is expected to under-perform the Monroe Capital. But the stock apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 1.49 times less risky than Monroe Capital. The stock trades about -0.1 of its potential returns per unit of risk. The Monroe Capital Corp is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 801.00 in Monroe Capital Corp on August 27, 2024 and sell it today you would earn a total of 48.00 from holding Monroe Capital Corp or generate 5.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Monroe Capital Corp
Performance |
| Timeline |
| Western Asset Diversified |
| Monroe Capital Corp |
Western Asset and Monroe Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Monroe Capital
The main advantage of trading using opposite Western Asset and Monroe Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Monroe Capital 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 Monroe Capital will offset losses from the drop in Monroe Capital's long position.| Western Asset vs. Doubleline Yield Opportunities | Western Asset vs. PIMCO Access Income | Western Asset vs. Blackrock Innovation Growth | Western Asset vs. Cohen Steers Tax Advantaged |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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