Correlation Between Western Asset and Heritage Fund
Can any of the company-specific risk be diversified away by investing in both Western Asset and Heritage 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 Asset and Heritage Fund 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 Heritage Fund A, you can compare the effects of market volatilities on Western Asset and Heritage 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 Asset with a short position of Heritage Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Heritage Fund.
Diversification Opportunities for Western Asset and Heritage Fund
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Heritage is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Heritage Fund A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heritage Fund A 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 Heritage Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heritage Fund A has no effect on the direction of Western Asset i.e., Western Asset and Heritage Fund go up and down completely randomly.
Pair Corralation between Western Asset and Heritage Fund
Assuming the 90 days horizon Western Asset Municipal is expected to under-perform the Heritage Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Municipal is 4.32 times less risky than Heritage Fund. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Heritage Fund A is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,838 in Heritage Fund A on September 14, 2024 and sell it today you would earn a total of 607.00 from holding Heritage Fund A or generate 33.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Heritage Fund A
Performance |
| Timeline |
| Western Asset Municipal |
| Heritage Fund A |
Western Asset and Heritage Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Heritage Fund
The main advantage of trading using opposite Western Asset and Heritage Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Heritage 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 Heritage Fund will offset losses from the drop in Heritage Fund's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Heritage Fund vs. California High Yield Municipal | Heritage Fund vs. Blrc Sgy Mnp | Heritage Fund vs. Dws Government Money | Heritage Fund vs. Gamco Global Telecommunications |
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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