Correlation Between Western Asset and Dreyfus Natural
Can any of the company-specific risk be diversified away by investing in both Western Asset and Dreyfus Natural 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 Dreyfus Natural 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 Dreyfus Natural Resources, you can compare the effects of market volatilities on Western Asset and Dreyfus Natural 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 Dreyfus Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Dreyfus Natural.
Diversification Opportunities for Western Asset and Dreyfus Natural
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Dreyfus is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Dreyfus Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Natural Resources 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 Dreyfus Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Natural Resources has no effect on the direction of Western Asset i.e., Western Asset and Dreyfus Natural go up and down completely randomly.
Pair Corralation between Western Asset and Dreyfus Natural
Assuming the 90 days horizon Western Asset Municipal is expected to generate 0.19 times more return on investment than Dreyfus Natural. However, Western Asset Municipal is 5.28 times less risky than Dreyfus Natural. It trades about 0.02 of its potential returns per unit of risk. Dreyfus Natural Resources is currently generating about -0.01 per unit of risk. If you would invest 708.00 in Western Asset Municipal on September 15, 2024 and sell it today you would earn a total of 19.00 from holding Western Asset Municipal or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Dreyfus Natural Resources
Performance |
| Timeline |
| Western Asset Municipal |
| Dreyfus Natural Resources |
Western Asset and Dreyfus Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Dreyfus Natural
The main advantage of trading using opposite Western Asset and Dreyfus Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Dreyfus Natural 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 Dreyfus Natural will offset losses from the drop in Dreyfus Natural'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 |
| Dreyfus Natural vs. Western Asset Municipal | Dreyfus Natural vs. Materials Portfolio Fidelity | Dreyfus Natural vs. Iaadx | Dreyfus Natural vs. Leggmason Partners Institutional |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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