Correlation Between Western Asset and Aim Investment
Can any of the company-specific risk be diversified away by investing in both Western Asset and Aim Investment 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 Aim Investment 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 Aim Investment Securities, you can compare the effects of market volatilities on Western Asset and Aim Investment 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 Aim Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Aim Investment.
Diversification Opportunities for Western Asset and Aim Investment
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Aim is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Aim Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Investment Securities 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 Aim Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Investment Securities has no effect on the direction of Western Asset i.e., Western Asset and Aim Investment go up and down completely randomly.
Pair Corralation between Western Asset and Aim Investment
Assuming the 90 days horizon Western Asset is expected to generate 1.31 times less return on investment than Aim Investment. In addition to that, Western Asset is 2.21 times more volatile than Aim Investment Securities. It trades about 0.14 of its total potential returns per unit of risk. Aim Investment Securities is currently generating about 0.4 per unit of volatility. If you would invest 2,534 in Aim Investment Securities on September 1, 2024 and sell it today you would earn a total of 39.00 from holding Aim Investment Securities or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset Municipal vs. Aim Investment Securities
Performance |
| Timeline |
| Western Asset Municipal |
| Aim Investment Securities |
Western Asset and Aim Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Aim Investment
The main advantage of trading using opposite Western Asset and Aim Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Aim Investment 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 Aim Investment will offset losses from the drop in Aim Investment's long position.| Western Asset vs. Lord Abbett Diversified | Western Asset vs. Blackrock Conservative Prprdptfinstttnl | Western Asset vs. Pioneer Diversified High | Western Asset vs. Aqr Diversified Arbitrage |
| Aim Investment vs. Invesco Municipal Income | Aim Investment vs. Invesco Municipal Income | Aim Investment vs. Invesco Municipal Income | Aim Investment vs. Oppenheimer Rising Dividends |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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