Correlation Between Western Asset and Longleaf Partners
Can any of the company-specific risk be diversified away by investing in both Western Asset and Longleaf Partners 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 Longleaf Partners 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 Longleaf Partners Fund, you can compare the effects of market volatilities on Western Asset and Longleaf Partners 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 Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Longleaf Partners.
Diversification Opportunities for Western Asset and Longleaf Partners
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Longleaf is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Longleaf Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners 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 Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners has no effect on the direction of Western Asset i.e., Western Asset and Longleaf Partners go up and down completely randomly.
Pair Corralation between Western Asset and Longleaf Partners
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Longleaf Partners. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 2.59 times less risky than Longleaf Partners. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Longleaf Partners Fund is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,304 in Longleaf Partners Fund on September 3, 2024 and sell it today you would earn a total of 271.00 from holding Longleaf Partners Fund or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Longleaf Partners Fund
Performance |
| Timeline |
| Western Asset Diversified |
| Longleaf Partners |
Western Asset and Longleaf Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Longleaf Partners
The main advantage of trading using opposite Western Asset and Longleaf Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Longleaf Partners 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 Longleaf Partners will offset losses from the drop in Longleaf Partners' 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 |
| Longleaf Partners vs. Dunham Large Cap | Longleaf Partners vs. Fidelity Series 1000 | Longleaf Partners vs. Tax Managed Large Cap | Longleaf Partners vs. American Mutual Fund |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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