Correlation Between Western Assets and Ab Bond
Can any of the company-specific risk be diversified away by investing in both Western Assets and Ab Bond 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 Assets and Ab Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Assets Emerging and Ab Bond Inflation, you can compare the effects of market volatilities on Western Assets and Ab Bond 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 Assets with a short position of Ab Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Ab Bond.
Diversification Opportunities for Western Assets and Ab Bond
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and ABNCX is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Ab Bond Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Bond Inflation and Western Assets 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 Assets Emerging are associated (or correlated) with Ab Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Bond Inflation has no effect on the direction of Western Assets i.e., Western Assets and Ab Bond go up and down completely randomly.
Pair Corralation between Western Assets and Ab Bond
Assuming the 90 days horizon Western Assets is expected to generate 1.58 times less return on investment than Ab Bond. In addition to that, Western Assets is 1.74 times more volatile than Ab Bond Inflation. It trades about 0.1 of its total potential returns per unit of risk. Ab Bond Inflation is currently generating about 0.26 per unit of volatility. If you would invest 994.00 in Ab Bond Inflation on October 30, 2024 and sell it today you would earn a total of 9.00 from holding Ab Bond Inflation or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Ab Bond Inflation
Performance |
| Timeline |
| Western Assets Emerging |
| Ab Bond Inflation |
Western Assets and Ab Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Ab Bond
The main advantage of trading using opposite Western Assets and Ab Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Ab Bond 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 Ab Bond will offset losses from the drop in Ab Bond's long position.| Western Assets vs. Transamerica Intermediate Muni | Western Assets vs. Intermediate Term Tax Free Bond | Western Assets vs. Nuveen Strategic Municipal | Western Assets vs. Ab Municipal Bond |
| Ab Bond vs. California Bond Fund | Ab Bond vs. Barings High Yield | Ab Bond vs. Ambrus Core Bond | Ab Bond vs. Blrc Sgy Mnp |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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