Correlation Between Western Asset and Berwyn Income
Can any of the company-specific risk be diversified away by investing in both Western Asset and Berwyn Income 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 Berwyn Income 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 Berwyn Income Fund, you can compare the effects of market volatilities on Western Asset and Berwyn Income 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 Berwyn Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Berwyn Income.
Diversification Opportunities for Western Asset and Berwyn Income
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Berwyn is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Berwyn Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berwyn Income 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 Berwyn Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berwyn Income has no effect on the direction of Western Asset i.e., Western Asset and Berwyn Income go up and down completely randomly.
Pair Corralation between Western Asset and Berwyn Income
Assuming the 90 days horizon Western Asset is expected to generate 37.86 times less return on investment than Berwyn Income. In addition to that, Western Asset is 1.34 times more volatile than Berwyn Income Fund. It trades about 0.0 of its total potential returns per unit of risk. Berwyn Income Fund is currently generating about 0.09 per unit of volatility. If you would invest 1,329 in Berwyn Income Fund on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Berwyn Income Fund or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Berwyn Income Fund
Performance |
| Timeline |
| Western Asset Municipal |
| Berwyn Income |
Western Asset and Berwyn Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Berwyn Income
The main advantage of trading using opposite Western Asset and Berwyn Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Berwyn Income 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 Berwyn Income will offset losses from the drop in Berwyn Income'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 |
| Berwyn Income vs. Vanguard Inflation Protected Securities | Berwyn Income vs. HUMANA INC | Berwyn Income vs. Aquagold International | Berwyn Income vs. Barloworld Ltd ADR |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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