Correlation Between Western Asset and Jpmorgan Short
Can any of the company-specific risk be diversified away by investing in both Western Asset and Jpmorgan 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 Jpmorgan 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 Jpmorgan Short Intermediate Municipal, you can compare the effects of market volatilities on Western Asset and Jpmorgan 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 Jpmorgan Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Jpmorgan Short.
Diversification Opportunities for Western Asset and Jpmorgan Short
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Jpmorgan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Jpmorgan Short Intermediate Mu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Short Inter 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 Jpmorgan Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Short Inter has no effect on the direction of Western Asset i.e., Western Asset and Jpmorgan Short go up and down completely randomly.
Pair Corralation between Western Asset and Jpmorgan Short
Assuming the 90 days horizon Western Asset is expected to generate 13.57 times less return on investment than Jpmorgan Short. In addition to that, Western Asset is 2.32 times more volatile than Jpmorgan Short Intermediate Municipal. It trades about 0.0 of its total potential returns per unit of risk. Jpmorgan Short Intermediate Municipal is currently generating about 0.08 per unit of volatility. If you would invest 977.00 in Jpmorgan Short Intermediate Municipal on September 1, 2024 and sell it today you would earn a total of 43.00 from holding Jpmorgan Short Intermediate Municipal or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
Western Asset Municipal vs. Jpmorgan Short Intermediate Mu
Performance |
| Timeline |
| Western Asset Municipal |
| Jpmorgan Short Inter |
Western Asset and Jpmorgan Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Jpmorgan Short
The main advantage of trading using opposite Western Asset and Jpmorgan Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Jpmorgan 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 Jpmorgan Short will offset losses from the drop in Jpmorgan Short's long position.| Western Asset vs. Lord Abbett Diversified | Western Asset vs. Blackrock Conservative Prprdptfinstttnl | Western Asset vs. Pioneer Diversified High | Western Asset vs. Aqr Diversified Arbitrage |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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