Correlation Between Western Asset and Ultra Short
Can any of the company-specific risk be diversified away by investing in both Western Asset and Ultra Short 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 Ultra Short 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 Ultra Short Income, you can compare the effects of market volatilities on Western Asset and Ultra Short 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 Ultra Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Ultra Short.
Diversification Opportunities for Western Asset and Ultra Short
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Ultra is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Ultra Short Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Short 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 Ultra Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Short Income has no effect on the direction of Western Asset i.e., Western Asset and Ultra Short go up and down completely randomly.
Pair Corralation between Western Asset and Ultra Short
Assuming the 90 days horizon Western Asset is expected to generate 2.02 times less return on investment than Ultra Short. In addition to that, Western Asset is 2.53 times more volatile than Ultra Short Income. It trades about 0.04 of its total potential returns per unit of risk. Ultra Short Income is currently generating about 0.22 per unit of volatility. If you would invest 943.00 in Ultra Short Income on September 14, 2024 and sell it today you would earn a total of 56.00 from holding Ultra Short Income or generate 5.94% 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. Ultra Short Income
Performance |
| Timeline |
| Western Asset Municipal |
| Ultra Short Income |
Western Asset and Ultra Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Ultra Short
The main advantage of trading using opposite Western Asset and Ultra Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Ultra Short 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 Ultra Short will offset losses from the drop in Ultra Short'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 |
| Ultra Short vs. Acm Dynamic Opportunity | Ultra Short vs. Western Asset Municipal | Ultra Short vs. Balanced Fund Investor | Ultra Short vs. Abr 7525 Volatility |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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