Correlation Between Western Asset and Marsico Midcap
Can any of the company-specific risk be diversified away by investing in both Western Asset and Marsico Midcap 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 Marsico Midcap 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 Marsico Midcap Growth, you can compare the effects of market volatilities on Western Asset and Marsico Midcap 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 Marsico Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Marsico Midcap.
Diversification Opportunities for Western Asset and Marsico Midcap
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Marsico is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Marsico Midcap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Midcap Growth 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 Marsico Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Midcap Growth has no effect on the direction of Western Asset i.e., Western Asset and Marsico Midcap go up and down completely randomly.
Pair Corralation between Western Asset and Marsico Midcap
Assuming the 90 days horizon Western Asset Municipal is expected to under-perform the Marsico Midcap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Municipal is 3.99 times less risky than Marsico Midcap. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Marsico Midcap Growth is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4,691 in Marsico Midcap Growth on September 14, 2024 and sell it today you would earn a total of 845.00 from holding Marsico Midcap Growth or generate 18.01% 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. Marsico Midcap Growth
Performance |
| Timeline |
| Western Asset Municipal |
| Marsico Midcap Growth |
Western Asset and Marsico Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Marsico Midcap
The main advantage of trading using opposite Western Asset and Marsico Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Marsico Midcap 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 Marsico Midcap will offset losses from the drop in Marsico Midcap'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 |
| Marsico Midcap vs. Western Asset Municipal | Marsico Midcap vs. T Rowe Price | Marsico Midcap vs. Bbh Intermediate Municipal | Marsico Midcap vs. The National Tax Free |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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