Correlation Between Western Asset and Ab Impact
Can any of the company-specific risk be diversified away by investing in both Western Asset and Ab Impact 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 Asset and Ab Impact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Ab Impact Municipal, you can compare the effects of market volatilities on Western Asset and Ab Impact 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 Asset with a short position of Ab Impact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Ab Impact.
Diversification Opportunities for Western Asset and Ab Impact
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and ABIMX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Ab Impact Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Impact Municipal and Western Asset 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 Asset Municipal are associated (or correlated) with Ab Impact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Impact Municipal has no effect on the direction of Western Asset i.e., Western Asset and Ab Impact go up and down completely randomly.
Pair Corralation between Western Asset and Ab Impact
Assuming the 90 days horizon Western Asset Municipal is expected to under-perform the Ab Impact. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Municipal is 1.18 times less risky than Ab Impact. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Ab Impact Municipal is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 901.00 in Ab Impact Municipal on October 28, 2024 and sell it today you would earn a total of 70.00 from holding Ab Impact Municipal or generate 7.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Ab Impact Municipal
Performance |
| Timeline |
| Western Asset Municipal |
| Ab Impact Municipal |
Western Asset and Ab Impact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Ab Impact
The main advantage of trading using opposite Western Asset and Ab Impact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Ab Impact 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 Impact will offset losses from the drop in Ab Impact's long position.| Western Asset vs. Us Vector Equity | Western Asset vs. Old Westbury Fixed | Western Asset vs. Gmo Global Equity | Western Asset vs. Greenspring Fund Retail |
| Ab Impact vs. Angel Oak Multi Strategy | Ab Impact vs. Artisan Developing World | Ab Impact vs. Morgan Stanley Emerging | Ab Impact vs. Investec Emerging Markets |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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