Correlation Between Western Asset and Aggressive Growth
Can any of the company-specific risk be diversified away by investing in both Western Asset and Aggressive Growth 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 Aggressive Growth 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 Aggressive Growth Fund, you can compare the effects of market volatilities on Western Asset and Aggressive Growth 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 Aggressive Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Aggressive Growth.
Diversification Opportunities for Western Asset and Aggressive Growth
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Aggressive is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Aggressive Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Growth 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 Aggressive Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Growth has no effect on the direction of Western Asset i.e., Western Asset and Aggressive Growth go up and down completely randomly.
Pair Corralation between Western Asset and Aggressive Growth
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Aggressive Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 4.23 times less risky than Aggressive Growth. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Aggressive Growth Fund is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,871 in Aggressive Growth Fund on December 4, 2024 and sell it today you would earn a total of 478.00 from holding Aggressive Growth Fund or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Aggressive Growth Fund
Performance |
| Timeline |
| Western Asset Diversified |
| Aggressive Growth |
Western Asset and Aggressive Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Aggressive Growth
The main advantage of trading using opposite Western Asset and Aggressive Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Aggressive Growth 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 Aggressive Growth will offset losses from the drop in Aggressive Growth's long position.| Western Asset vs. Rbc Emerging Markets | Western Asset vs. Templeton Developing Markets | Western Asset vs. Locorr Market Trend | Western Asset vs. Calvert Developed Market |
| Aggressive Growth vs. Putnam Vertible Securities | Aggressive Growth vs. Calamos Vertible Fund | Aggressive Growth vs. Gabelli Convertible And | Aggressive Growth vs. Fidelity Vertible Securities |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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