Correlation Between Western Asset and Pacific Funds
Can any of the company-specific risk be diversified away by investing in both Western Asset and Pacific Funds 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 Pacific Funds 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 Pacific Funds Ultra, you can compare the effects of market volatilities on Western Asset and Pacific Funds 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 Pacific Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Pacific Funds.
Diversification Opportunities for Western Asset and Pacific Funds
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Pacific is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Pacific Funds Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Funds Ultra 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 Pacific Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Funds Ultra has no effect on the direction of Western Asset i.e., Western Asset and Pacific Funds go up and down completely randomly.
Pair Corralation between Western Asset and Pacific Funds
Assuming the 90 days horizon Western Asset is expected to generate 13.44 times less return on investment than Pacific Funds. In addition to that, Western Asset is 2.99 times more volatile than Pacific Funds Ultra. It trades about 0.01 of its total potential returns per unit of risk. Pacific Funds Ultra is currently generating about 0.23 per unit of volatility. If you would invest 939.00 in Pacific Funds Ultra on September 14, 2024 and sell it today you would earn a total of 58.00 from holding Pacific Funds Ultra or generate 6.18% 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. Pacific Funds Ultra
Performance |
| Timeline |
| Western Asset Diversified |
| Pacific Funds Ultra |
Western Asset and Pacific Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Pacific Funds
The main advantage of trading using opposite Western Asset and Pacific Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Pacific Funds 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 Pacific Funds will offset losses from the drop in Pacific Funds' 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 |
| Pacific Funds vs. Pacific Funds Floating | Pacific Funds vs. Pacific Funds High | Pacific Funds vs. Pacific Funds Short | Pacific Funds vs. Pacific Funds Short |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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