Correlation Between Western Asset and Listed Funds
Can any of the company-specific risk be diversified away by investing in both Western Asset and Listed Funds 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 Listed Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Claymore and Listed Funds Trust, you can compare the effects of market volatilities on Western Asset and Listed Funds 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 Listed Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Listed Funds.
Diversification Opportunities for Western Asset and Listed Funds
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Listed is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Claymore and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds Trust 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 Claymore are associated (or correlated) with Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of Western Asset i.e., Western Asset and Listed Funds go up and down completely randomly.
Pair Corralation between Western Asset and Listed Funds
Considering the 90-day investment horizon Western Asset Claymore is expected to generate 0.81 times more return on investment than Listed Funds. However, Western Asset Claymore is 1.24 times less risky than Listed Funds. It trades about 0.01 of its potential returns per unit of risk. Listed Funds Trust is currently generating about -0.14 per unit of risk. If you would invest 865.00 in Western Asset Claymore on August 30, 2024 and sell it today you would earn a total of 1.00 from holding Western Asset Claymore or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Claymore vs. Listed Funds Trust
Performance |
| Timeline |
| Western Asset Claymore |
| Listed Funds Trust |
Western Asset and Listed Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Listed Funds
The main advantage of trading using opposite Western Asset and Listed Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Listed Funds 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 Listed Funds will offset losses from the drop in Listed Funds' long position.| Western Asset vs. The Gabelli Equity | Western Asset vs. Eaton Vance National | Western Asset vs. Structured Products Corp | Western Asset vs. Aberdeen Standard Global |
| Listed Funds vs. Teucrium Agricultural | Listed Funds vs. Teucrium Sugar | Listed Funds vs. Teucrium Soybean | Listed Funds vs. Teucrium Wheat |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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