Correlation Between Western Assets and Federated Fund
Can any of the company-specific risk be diversified away by investing in both Western Assets and Federated Fund 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 Federated Fund 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 Federated Fund For, you can compare the effects of market volatilities on Western Assets and Federated Fund 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 Federated Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Federated Fund.
Diversification Opportunities for Western Assets and Federated Fund
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Federated is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Federated Fund For in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Fund For 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 Federated Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Fund For has no effect on the direction of Western Assets i.e., Western Assets and Federated Fund go up and down completely randomly.
Pair Corralation between Western Assets and Federated Fund
Assuming the 90 days horizon Western Assets Emerging is expected to generate 0.9 times more return on investment than Federated Fund. However, Western Assets Emerging is 1.11 times less risky than Federated Fund. It trades about 0.13 of its potential returns per unit of risk. Federated Fund For is currently generating about 0.02 per unit of risk. If you would invest 895.00 in Western Assets Emerging on September 12, 2024 and sell it today you would earn a total of 195.00 from holding Western Assets Emerging or generate 21.79% 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. Federated Fund For
Performance |
| Timeline |
| Western Assets Emerging |
| Federated Fund For |
Western Assets and Federated Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Federated Fund
The main advantage of trading using opposite Western Assets and Federated Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Federated Fund 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 Federated Fund will offset losses from the drop in Federated Fund's long position.| Western Assets vs. Cb Large Cap | Western Assets vs. American Mutual Fund | Western Assets vs. Americafirst Large Cap | Western Assets vs. Dodge Cox Stock |
| Federated Fund vs. Vanguard Gnma Fund | Federated Fund vs. Vanguard Intermediate Term Government | Federated Fund vs. Us Government Securities | Federated Fund vs. Us Government Securities |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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