Correlation Between Western Asset and Principal Lifetime
Can any of the company-specific risk be diversified away by investing in both Western Asset and Principal Lifetime 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 Principal Lifetime 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 Principal Lifetime 2030, you can compare the effects of market volatilities on Western Asset and Principal Lifetime 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 Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Principal Lifetime.
Diversification Opportunities for Western Asset and Principal Lifetime
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Principal is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Principal Lifetime 2030 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime 2030 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 Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime 2030 has no effect on the direction of Western Asset i.e., Western Asset and Principal Lifetime go up and down completely randomly.
Pair Corralation between Western Asset and Principal Lifetime
Assuming the 90 days horizon Western Asset is expected to generate 9.03 times less return on investment than Principal Lifetime. But when comparing it to its historical volatility, Western Asset Municipal is 1.77 times less risky than Principal Lifetime. It trades about 0.02 of its potential returns per unit of risk. Principal Lifetime 2030 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,382 in Principal Lifetime 2030 on August 28, 2024 and sell it today you would earn a total of 94.00 from holding Principal Lifetime 2030 or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Western Asset Municipal vs. Principal Lifetime 2030
Performance |
| Timeline |
| Western Asset Municipal |
| Principal Lifetime 2030 |
Western Asset and Principal Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Principal Lifetime
The main advantage of trading using opposite Western Asset and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Principal Lifetime 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 Principal Lifetime will offset losses from the drop in Principal Lifetime's long position.| Western Asset vs. Baird Strategic Municipal | Western Asset vs. Counterpoint Tactical Municipal | Western Asset vs. California High Yield Municipal | Western Asset vs. Alliancebernstein National Municipal |
| Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime vs. Strategic Asset Management | Principal Lifetime 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |