Correlation Between Western Asset and Pace Alternative
Can any of the company-specific risk be diversified away by investing in both Western Asset and Pace Alternative 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 Pace Alternative 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 Pace Alternative Strategies, you can compare the effects of market volatilities on Western Asset and Pace Alternative 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 Pace Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Pace Alternative.
Diversification Opportunities for Western Asset and Pace Alternative
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Pace is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Pace Alternative Strategies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Alternative Str 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 Pace Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Alternative Str has no effect on the direction of Western Asset i.e., Western Asset and Pace Alternative go up and down completely randomly.
Pair Corralation between Western Asset and Pace Alternative
Assuming the 90 days horizon Western Asset is expected to generate 2.51 times less return on investment than Pace Alternative. In addition to that, Western Asset is 1.26 times more volatile than Pace Alternative Strategies. It trades about 0.11 of its total potential returns per unit of risk. Pace Alternative Strategies is currently generating about 0.33 per unit of volatility. If you would invest 1,124 in Pace Alternative Strategies on September 1, 2024 and sell it today you would earn a total of 25.00 from holding Pace Alternative Strategies or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset Municipal vs. Pace Alternative Strategies
Performance |
| Timeline |
| Western Asset Municipal |
| Pace Alternative Str |
Western Asset and Pace Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Pace Alternative
The main advantage of trading using opposite Western Asset and Pace Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Pace Alternative 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 Pace Alternative will offset losses from the drop in Pace Alternative'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 |
| Pace Alternative vs. Arrow Managed Futures | Pace Alternative vs. Materials Portfolio Fidelity | Pace Alternative vs. Western Asset Municipal | Pace Alternative vs. Leggmason Partners Institutional |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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