Correlation Between Western Asset and Absolute Capital
Can any of the company-specific risk be diversified away by investing in both Western Asset and Absolute Capital 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 Absolute Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Absolute Capital Asset, you can compare the effects of market volatilities on Western Asset and Absolute Capital 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 Absolute Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Absolute Capital.
Diversification Opportunities for Western Asset and Absolute Capital
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Absolute is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Absolute Capital Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Capital Asset 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 Diversified are associated (or correlated) with Absolute Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Capital Asset has no effect on the direction of Western Asset i.e., Western Asset and Absolute Capital go up and down completely randomly.
Pair Corralation between Western Asset and Absolute Capital
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Absolute Capital. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 2.97 times less risky than Absolute Capital. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Absolute Capital Asset is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,169 in Absolute Capital Asset on August 24, 2024 and sell it today you would earn a total of 40.00 from holding Absolute Capital Asset or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Western Asset Diversified vs. Absolute Capital Asset
Performance |
| Timeline |
| Western Asset Diversified |
| Absolute Capital Asset |
Western Asset and Absolute Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Absolute Capital
The main advantage of trading using opposite Western Asset and Absolute Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Absolute Capital 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 Absolute Capital will offset losses from the drop in Absolute Capital's long position.| Western Asset vs. Dreyfusstandish Global Fixed | Western Asset vs. Ms Global Fixed | Western Asset vs. Us Vector Equity | Western Asset vs. Small Cap Equity |
| Absolute Capital vs. Conservative Balanced Allocation | Absolute Capital vs. Oaktree Diversifiedome | Absolute Capital vs. Delaware Limited Term Diversified | Absolute Capital vs. Prudential Core Conservative |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |