Correlation Between Western Asset and Vaughan Nelson
Can any of the company-specific risk be diversified away by investing in both Western Asset and Vaughan Nelson 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 Vaughan Nelson 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 Vaughan Nelson Select, you can compare the effects of market volatilities on Western Asset and Vaughan Nelson 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 Vaughan Nelson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Vaughan Nelson.
Diversification Opportunities for Western Asset and Vaughan Nelson
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Vaughan is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Vaughan Nelson Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaughan Nelson Select 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 Vaughan Nelson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaughan Nelson Select has no effect on the direction of Western Asset i.e., Western Asset and Vaughan Nelson go up and down completely randomly.
Pair Corralation between Western Asset and Vaughan Nelson
Assuming the 90 days horizon Western Asset is expected to generate 7.05 times less return on investment than Vaughan Nelson. But when comparing it to its historical volatility, Western Asset Diversified is 3.17 times less risky than Vaughan Nelson. It trades about 0.11 of its potential returns per unit of risk. Vaughan Nelson Select is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,898 in Vaughan Nelson Select on September 2, 2024 and sell it today you would earn a total of 88.00 from holding Vaughan Nelson Select or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Vaughan Nelson Select
Performance |
| Timeline |
| Western Asset Diversified |
| Vaughan Nelson Select |
Western Asset and Vaughan Nelson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Vaughan Nelson
The main advantage of trading using opposite Western Asset and Vaughan Nelson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Vaughan Nelson 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 Vaughan Nelson will offset losses from the drop in Vaughan Nelson'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 |
| Vaughan Nelson vs. Western Asset Diversified | Vaughan Nelson vs. Sp Midcap Index | Vaughan Nelson vs. Artisan Emerging Markets | Vaughan Nelson vs. Aqr Sustainable Long 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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