Correlation Between Western Asset and Vanguard Lifestrategy
Can any of the company-specific risk be diversified away by investing in both Western Asset and Vanguard Lifestrategy 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 Vanguard Lifestrategy 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 Vanguard Lifestrategy Growth, you can compare the effects of market volatilities on Western Asset and Vanguard Lifestrategy 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 Vanguard Lifestrategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Vanguard Lifestrategy.
Diversification Opportunities for Western Asset and Vanguard Lifestrategy
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Vanguard is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Vanguard Lifestrategy Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Lifestrategy 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 Vanguard Lifestrategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Lifestrategy has no effect on the direction of Western Asset i.e., Western Asset and Vanguard Lifestrategy go up and down completely randomly.
Pair Corralation between Western Asset and Vanguard Lifestrategy
Assuming the 90 days horizon Western Asset Diversified is expected to generate 0.32 times more return on investment than Vanguard Lifestrategy. However, Western Asset Diversified is 3.17 times less risky than Vanguard Lifestrategy. It trades about -0.05 of its potential returns per unit of risk. Vanguard Lifestrategy Growth is currently generating about -0.12 per unit of risk. If you would invest 1,527 in Western Asset Diversified on October 20, 2024 and sell it today you would lose (5.00) from holding Western Asset Diversified or give up 0.33% 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. Vanguard Lifestrategy Growth
Performance |
| Timeline |
| Western Asset Diversified |
| Vanguard Lifestrategy |
Western Asset and Vanguard Lifestrategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Vanguard Lifestrategy
The main advantage of trading using opposite Western Asset and Vanguard Lifestrategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Vanguard Lifestrategy 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 Vanguard Lifestrategy will offset losses from the drop in Vanguard Lifestrategy's long position.| Western Asset vs. Morningstar Defensive Bond | Western Asset vs. Doubleline Total Return | Western Asset vs. Gmo High Yield | Western Asset vs. Ambrus Core 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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