Correlation Between Western Assets and Payden E
Can any of the company-specific risk be diversified away by investing in both Western Assets and Payden E 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 Payden E 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 Payden E Bond, you can compare the effects of market volatilities on Western Assets and Payden E 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 Payden E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Payden E.
Diversification Opportunities for Western Assets and Payden E
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Payden is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Payden E Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payden E Bond 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 Payden E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payden E Bond has no effect on the direction of Western Assets i.e., Western Assets and Payden E go up and down completely randomly.
Pair Corralation between Western Assets and Payden E
Assuming the 90 days horizon Western Assets Emerging is expected to generate 1.08 times more return on investment than Payden E. However, Western Assets is 1.08 times more volatile than Payden E Bond. It trades about 0.1 of its potential returns per unit of risk. Payden E Bond is currently generating about 0.05 per unit of risk. If you would invest 981.00 in Western Assets Emerging on November 3, 2024 and sell it today you would earn a total of 88.00 from holding Western Assets Emerging or generate 8.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Payden E Bond
Performance |
| Timeline |
| Western Assets Emerging |
| Payden E Bond |
Western Assets and Payden E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Payden E
The main advantage of trading using opposite Western Assets and Payden E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Payden E 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 Payden E will offset losses from the drop in Payden E'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 |
| Payden E vs. California Municipal Portfolio | Payden E vs. Pace Municipal Fixed | Payden E vs. Lind Capital Partners | Payden E vs. Federated Government Income |
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 Stocks Directory module to find actively traded stocks across global markets.
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