Correlation Between Western Assets and Victory Tax-exempt
Can any of the company-specific risk be diversified away by investing in both Western Assets and Victory Tax-exempt 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 Victory Tax-exempt 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 Victory Tax Exempt Fund, you can compare the effects of market volatilities on Western Assets and Victory Tax-exempt 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 Victory Tax-exempt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Victory Tax-exempt.
Diversification Opportunities for Western Assets and Victory Tax-exempt
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Victory is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Victory Tax Exempt Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Tax Exempt 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 Victory Tax-exempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Tax Exempt has no effect on the direction of Western Assets i.e., Western Assets and Victory Tax-exempt go up and down completely randomly.
Pair Corralation between Western Assets and Victory Tax-exempt
Assuming the 90 days horizon Western Assets Emerging is expected to generate 0.99 times more return on investment than Victory Tax-exempt. However, Western Assets Emerging is 1.01 times less risky than Victory Tax-exempt. It trades about 0.15 of its potential returns per unit of risk. Victory Tax Exempt Fund is currently generating about -0.03 per unit of risk. If you would invest 1,062 in Western Assets Emerging on November 3, 2024 and sell it today you would earn a total of 10.00 from holding Western Assets Emerging or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Victory Tax Exempt Fund
Performance |
| Timeline |
| Western Assets Emerging |
| Victory Tax Exempt |
Western Assets and Victory Tax-exempt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Victory Tax-exempt
The main advantage of trading using opposite Western Assets and Victory Tax-exempt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Victory Tax-exempt 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 Victory Tax-exempt will offset losses from the drop in Victory Tax-exempt's long position.| Western Assets vs. Schwab Small Cap Index | Western Assets vs. Tax Managed Mid Small | Western Assets vs. Lord Abbett Diversified | Western Assets vs. Lord Abbett Diversified |
| Victory Tax-exempt vs. Stringer Growth Fund | Victory Tax-exempt vs. Morningstar Growth Etf | Victory Tax-exempt vs. Mid Cap Growth | Victory Tax-exempt vs. Praxis Genesis Growth |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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