Correlation Between Western Asset and Pro-blend(r) Moderate
Can any of the company-specific risk be diversified away by investing in both Western Asset and Pro-blend(r) 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 Pro-blend(r) 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 Pro Blend Moderate Term, you can compare the effects of market volatilities on Western Asset and Pro-blend(r) 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 Pro-blend(r) Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Pro-blend(r) Moderate.
Diversification Opportunities for Western Asset and Pro-blend(r) Moderate
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Pro-blend(r) is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Pro Blend Moderate Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pro-blend(r) 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 Pro-blend(r) Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pro-blend(r) Moderate has no effect on the direction of Western Asset i.e., Western Asset and Pro-blend(r) Moderate go up and down completely randomly.
Pair Corralation between Western Asset and Pro-blend(r) Moderate
Assuming the 90 days horizon Western Asset Municipal is expected to under-perform the Pro-blend(r) Moderate. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Municipal is 1.14 times less risky than Pro-blend(r) Moderate. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Pro Blend Moderate Term is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,488 in Pro Blend Moderate Term on September 3, 2024 and sell it today you would earn a total of 13.00 from holding Pro Blend Moderate Term or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Pro Blend Moderate Term
Performance |
| Timeline |
| Western Asset Municipal |
| Pro-blend(r) Moderate |
Western Asset and Pro-blend(r) Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Pro-blend(r) Moderate
The main advantage of trading using opposite Western Asset and Pro-blend(r) Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Pro-blend(r) 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 Pro-blend(r) Moderate will offset losses from the drop in Pro-blend(r) Moderate's long position.| Western Asset vs. Columbia Real Estate | Western Asset vs. Prudential Real Estate | Western Asset vs. Us Real Estate | Western Asset vs. Guggenheim Risk Managed |
| Pro-blend(r) Moderate vs. The Fixed Income | Pro-blend(r) Moderate vs. Jpmorgan Equity Income | Pro-blend(r) Moderate vs. Balanced Fund Retail | Pro-blend(r) Moderate vs. Small Cap Equity |
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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