Correlation Between Western Asset and Mainstay Moderate
Can any of the company-specific risk be diversified away by investing in both Western Asset and Mainstay Moderate 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 Mainstay Moderate 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 Mainstay Moderate Allocation, you can compare the effects of market volatilities on Western Asset and Mainstay Moderate 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 Mainstay Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Mainstay Moderate.
Diversification Opportunities for Western Asset and Mainstay Moderate
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Mainstay is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Mainstay Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate 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 Mainstay Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Moderate has no effect on the direction of Western Asset i.e., Western Asset and Mainstay Moderate go up and down completely randomly.
Pair Corralation between Western Asset and Mainstay Moderate
Assuming the 90 days horizon Western Asset is expected to generate 6.61 times less return on investment than Mainstay Moderate. But when comparing it to its historical volatility, Western Asset Municipal is 1.83 times less risky than Mainstay Moderate. It trades about 0.03 of its potential returns per unit of risk. Mainstay Moderate Allocation is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,163 in Mainstay Moderate Allocation on September 12, 2024 and sell it today you would earn a total of 294.00 from holding Mainstay Moderate Allocation or generate 25.28% 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. Mainstay Moderate Allocation
Performance |
| Timeline |
| Western Asset Municipal |
| Mainstay Moderate |
Western Asset and Mainstay Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Mainstay Moderate
The main advantage of trading using opposite Western Asset and Mainstay Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Mainstay Moderate 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 Mainstay Moderate will offset losses from the drop in Mainstay Moderate's long position.| Western Asset vs. Barings Active Short | Western Asset vs. Cmg Ultra Short | Western Asset vs. Blackrock Short Term Inflat Protected | Western Asset vs. Rbc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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