Correlation Between Western Assets and Ab Value
Can any of the company-specific risk be diversified away by investing in both Western Assets and Ab Value 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 Value 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 Value Fund, you can compare the effects of market volatilities on Western Assets and Ab Value 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 Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Ab Value.
Diversification Opportunities for Western Assets and Ab Value
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and ABVCX is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Ab Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Value Fund 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 Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Value Fund has no effect on the direction of Western Assets i.e., Western Assets and Ab Value go up and down completely randomly.
Pair Corralation between Western Assets and Ab Value
Assuming the 90 days horizon Western Assets is expected to generate 3.34 times less return on investment than Ab Value. But when comparing it to its historical volatility, Western Assets Emerging is 2.22 times less risky than Ab Value. It trades about 0.17 of its potential returns per unit of risk. Ab Value Fund is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,783 in Ab Value Fund on September 5, 2024 and sell it today you would earn a total of 284.00 from holding Ab Value Fund or generate 15.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Ab Value Fund
Performance |
| Timeline |
| Western Assets Emerging |
| Ab Value Fund |
Western Assets and Ab Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Ab Value
The main advantage of trading using opposite Western Assets and Ab Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Ab Value 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 Value will offset losses from the drop in Ab Value's long position.| Western Assets vs. Amg Managers Centersquare | Western Assets vs. Franklin Real Estate | Western Assets vs. Franklin Real Estate | Western Assets vs. Columbia Real Estate |
| Ab Value vs. Massmutual Select Diversified | Ab Value vs. Calamos Market Neutral | Ab Value vs. Ep Emerging Markets | Ab Value vs. Western Assets Emerging |
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
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |