Correlation Between Western Asset and Dimensional 2030
Can any of the company-specific risk be diversified away by investing in both Western Asset and Dimensional 2030 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 Dimensional 2030 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 Dimensional 2030 Target, you can compare the effects of market volatilities on Western Asset and Dimensional 2030 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 Dimensional 2030. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Dimensional 2030.
Diversification Opportunities for Western Asset and Dimensional 2030
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Dimensional is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Dimensional 2030 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2030 Target 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 Dimensional 2030. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2030 Target has no effect on the direction of Western Asset i.e., Western Asset and Dimensional 2030 go up and down completely randomly.
Pair Corralation between Western Asset and Dimensional 2030
Assuming the 90 days horizon Western Asset is expected to generate 2.48 times less return on investment than Dimensional 2030. But when comparing it to its historical volatility, Western Asset Diversified is 1.83 times less risky than Dimensional 2030. It trades about 0.05 of its potential returns per unit of risk. Dimensional 2030 Target is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,253 in Dimensional 2030 Target on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Dimensional 2030 Target or generate 0.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Dimensional 2030 Target
Performance |
| Timeline |
| Western Asset Diversified |
| Dimensional 2030 Target |
Western Asset and Dimensional 2030 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Dimensional 2030
The main advantage of trading using opposite Western Asset and Dimensional 2030 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Dimensional 2030 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 Dimensional 2030 will offset losses from the drop in Dimensional 2030's long position.| Western Asset vs. Davis Financial Fund | Western Asset vs. Prudential Jennison Financial | Western Asset vs. Mesirow Financial Small | Western Asset vs. Fidelity Advisor Financial |
| Dimensional 2030 vs. Fidelity Advisor Diversified | Dimensional 2030 vs. Western Asset Diversified | Dimensional 2030 vs. Harbor Diversified International | Dimensional 2030 vs. Pioneer Diversified High |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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