Correlation Between Western Asset and Holbrook Income
Can any of the company-specific risk be diversified away by investing in both Western Asset and Holbrook 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 Holbrook 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 Holbrook Income Fund, you can compare the effects of market volatilities on Western Asset and Holbrook 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 Holbrook Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Holbrook Income.
Diversification Opportunities for Western Asset and Holbrook Income
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Holbrook is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Holbrook Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holbrook 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 Holbrook Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holbrook Income has no effect on the direction of Western Asset i.e., Western Asset and Holbrook Income go up and down completely randomly.
Pair Corralation between Western Asset and Holbrook Income
Assuming the 90 days horizon Western Asset is expected to generate 7.0 times less return on investment than Holbrook Income. In addition to that, Western Asset is 1.31 times more volatile than Holbrook Income Fund. It trades about 0.02 of its total potential returns per unit of risk. Holbrook Income Fund is currently generating about 0.15 per unit of volatility. If you would invest 874.00 in Holbrook Income Fund on September 1, 2024 and sell it today you would earn a total of 108.00 from holding Holbrook Income Fund or generate 12.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Western Asset Municipal vs. Holbrook Income Fund
Performance |
| Timeline |
| Western Asset Municipal |
| Holbrook Income |
Western Asset and Holbrook Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Holbrook Income
The main advantage of trading using opposite Western Asset and Holbrook Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Holbrook 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 Holbrook Income will offset losses from the drop in Holbrook Income'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 |
| Holbrook Income vs. Alpine High Yield | Holbrook Income vs. American Century High | Holbrook Income vs. Dunham High Yield | Holbrook Income vs. Prudential Short Duration |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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