Correlation Between Western Asset and Locorr Market
Can any of the company-specific risk be diversified away by investing in both Western Asset and Locorr Market 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 Locorr Market 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 Locorr Market Trend, you can compare the effects of market volatilities on Western Asset and Locorr Market 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 Locorr Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Locorr Market.
Diversification Opportunities for Western Asset and Locorr Market
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Locorr is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Locorr Market Trend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Locorr Market Trend 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 Locorr Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Locorr Market Trend has no effect on the direction of Western Asset i.e., Western Asset and Locorr Market go up and down completely randomly.
Pair Corralation between Western Asset and Locorr Market
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Locorr Market. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 3.28 times less risky than Locorr Market. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Locorr Market Trend is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,076 in Locorr Market Trend on September 2, 2024 and sell it today you would lose (1.00) from holding Locorr Market Trend or give up 0.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Locorr Market Trend
Performance |
| Timeline |
| Western Asset Diversified |
| Locorr Market Trend |
Western Asset and Locorr Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Locorr Market
The main advantage of trading using opposite Western Asset and Locorr Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Locorr Market 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 Locorr Market will offset losses from the drop in Locorr Market's long position.| Western Asset vs. Morningstar Unconstrained Allocation | Western Asset vs. Old Westbury Large | Western Asset vs. T Rowe Price | Western Asset vs. Enhanced Large Pany |
| Locorr Market vs. Ab Government Exchange | Locorr Market vs. Government Securities Fund | Locorr Market vs. Us Government Securities | Locorr Market vs. Prudential Government Income |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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