Correlation Between Western Asset and Ab Sustainable
Can any of the company-specific risk be diversified away by investing in both Western Asset and Ab Sustainable 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 Ab Sustainable 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 Ab Sustainable Thematic, you can compare the effects of market volatilities on Western Asset and Ab Sustainable 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 Ab Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Ab Sustainable.
Diversification Opportunities for Western Asset and Ab Sustainable
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and STHYX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Ab Sustainable Thematic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Sustainable Thematic 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 Ab Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Sustainable Thematic has no effect on the direction of Western Asset i.e., Western Asset and Ab Sustainable go up and down completely randomly.
Pair Corralation between Western Asset and Ab Sustainable
Assuming the 90 days horizon Western Asset is expected to generate 1.25 times less return on investment than Ab Sustainable. But when comparing it to its historical volatility, Western Asset Municipal is 1.72 times less risky than Ab Sustainable. It trades about 0.23 of its potential returns per unit of risk. Ab Sustainable Thematic is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 834.00 in Ab Sustainable Thematic on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Ab Sustainable Thematic or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Ab Sustainable Thematic
Performance |
| Timeline |
| Western Asset Municipal |
| Ab Sustainable Thematic |
Western Asset and Ab Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Ab Sustainable
The main advantage of trading using opposite Western Asset and Ab Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Ab Sustainable 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 Ab Sustainable will offset losses from the drop in Ab Sustainable'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 |
| Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Global E | Ab Sustainable vs. Ab Minnesota Portfolio |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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