Correlation Between Western Asset and Us Government
Can any of the company-specific risk be diversified away by investing in both Western Asset and Us Government 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 Us Government 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 Us Government Plus, you can compare the effects of market volatilities on Western Asset and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Us Government.
Diversification Opportunities for Western Asset and Us Government
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and GVPIX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Us Government Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Plus 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Plus has no effect on the direction of Western Asset i.e., Western Asset and Us Government go up and down completely randomly.
Pair Corralation between Western Asset and Us Government
Assuming the 90 days horizon Western Asset Diversified is expected to generate 0.39 times more return on investment than Us Government. However, Western Asset Diversified is 2.56 times less risky than Us Government. It trades about -0.36 of its potential returns per unit of risk. Us Government Plus is currently generating about -0.57 per unit of risk. If you would invest 1,550 in Western Asset Diversified on October 1, 2024 and sell it today you would lose (36.00) from holding Western Asset Diversified or give up 2.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Us Government Plus
Performance |
| Timeline |
| Western Asset Diversified |
| Us Government Plus |
Western Asset and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Us Government
The main advantage of trading using opposite Western Asset and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government'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 |
| Us Government vs. Dunham Porategovernment Bond | Us Government vs. Elfun Government Money | Us Government vs. Prudential Government Income | Us Government vs. Davis Government Bond |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |