Correlation Between Western Asset and James Alpha
Can any of the company-specific risk be diversified away by investing in both Western Asset and James Alpha 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 James Alpha 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 James Alpha Structured, you can compare the effects of market volatilities on Western Asset and James Alpha 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 James Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and James Alpha.
Diversification Opportunities for Western Asset and James Alpha
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and James is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and James Alpha Structured in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Alpha Structured 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 James Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Alpha Structured has no effect on the direction of Western Asset i.e., Western Asset and James Alpha go up and down completely randomly.
Pair Corralation between Western Asset and James Alpha
Assuming the 90 days horizon Western Asset is expected to generate 31.67 times less return on investment than James Alpha. In addition to that, Western Asset is 1.65 times more volatile than James Alpha Structured. It trades about 0.0 of its total potential returns per unit of risk. James Alpha Structured is currently generating about 0.07 per unit of volatility. If you would invest 1,015 in James Alpha Structured on November 28, 2024 and sell it today you would earn a total of 2.00 from holding James Alpha Structured or generate 0.2% 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. James Alpha Structured
Performance |
| Timeline |
| Western Asset Municipal |
| James Alpha Structured |
Western Asset and James Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and James Alpha
The main advantage of trading using opposite Western Asset and James Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, James Alpha 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 James Alpha will offset losses from the drop in James Alpha's long position.| Western Asset vs. Doubleline Total Return | Western Asset vs. Ambrus Core Bond | Western Asset vs. Flexible Bond Portfolio | Western Asset vs. Calvert Bond Portfolio |
| James Alpha vs. Gmo High Yield | James Alpha vs. The Hartford World | James Alpha vs. Dreyfusstandish Global Fixed | James Alpha vs. Multisector Bond Sma |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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