Correlation Between Western Assets and Target Managed
Can any of the company-specific risk be diversified away by investing in both Western Assets and Target Managed 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 Target Managed 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 Target Managed Allocation, you can compare the effects of market volatilities on Western Assets and Target Managed 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 Target Managed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Target Managed.
Diversification Opportunities for Western Assets and Target Managed
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Target is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Target Managed Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Managed Allocation 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 Target Managed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Managed Allocation has no effect on the direction of Western Assets i.e., Western Assets and Target Managed go up and down completely randomly.
Pair Corralation between Western Assets and Target Managed
Assuming the 90 days horizon Western Assets is expected to generate 3.17 times less return on investment than Target Managed. But when comparing it to its historical volatility, Western Assets Emerging is 1.53 times less risky than Target Managed. It trades about 0.16 of its potential returns per unit of risk. Target Managed Allocation is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,067 in Target Managed Allocation on September 4, 2024 and sell it today you would earn a total of 44.00 from holding Target Managed Allocation or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Western Assets Emerging vs. Target Managed Allocation
Performance |
| Timeline |
| Western Assets Emerging |
| Target Managed Allocation |
Western Assets and Target Managed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Target Managed
The main advantage of trading using opposite Western Assets and Target Managed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Target Managed 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 Target Managed will offset losses from the drop in Target Managed's long position.| Western Assets vs. Heartland Value Plus | Western Assets vs. Royce Opportunity Fund | Western Assets vs. Royce Opportunity Fund | Western Assets vs. Queens Road Small |
| Target Managed vs. Capital Growth Fund | Target Managed vs. Emerging Markets Fund | Target Managed vs. International Fund International | Target Managed vs. Growth Income Fund |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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