Correlation Between Western Asset and Strategic Asset
Can any of the company-specific risk be diversified away by investing in both Western Asset and Strategic Asset 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 Strategic Asset 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 Strategic Asset Management, you can compare the effects of market volatilities on Western Asset and Strategic Asset 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 Strategic Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Strategic Asset.
Diversification Opportunities for Western Asset and Strategic Asset
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and Strategic is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Strategic Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Asset Mana 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 Strategic Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Asset Mana has no effect on the direction of Western Asset i.e., Western Asset and Strategic Asset go up and down completely randomly.
Pair Corralation between Western Asset and Strategic Asset
Assuming the 90 days horizon Western Asset Municipal is expected to under-perform the Strategic Asset. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Municipal is 1.99 times less risky than Strategic Asset. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Strategic Asset Management is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,560 in Strategic Asset Management on November 2, 2024 and sell it today you would earn a total of 51.00 from holding Strategic Asset Management or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Strategic Asset Management
Performance |
| Timeline |
| Western Asset Municipal |
| Strategic Asset Mana |
Western Asset and Strategic Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Strategic Asset
The main advantage of trading using opposite Western Asset and Strategic Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Strategic Asset 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 Strategic Asset will offset losses from the drop in Strategic Asset's long position.| Western Asset vs. Morningstar Defensive Bond | Western Asset vs. Multisector Bond Sma | Western Asset vs. Ab Global Bond | Western Asset vs. Ab Bond Inflation |
| Strategic Asset vs. Strategic Asset Management | Strategic Asset vs. Strategic Asset Management | Strategic Asset vs. Strategic Asset Management | Strategic Asset vs. Strategic Asset Management |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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