Correlation Between Aam/himco Short and Western Asset

Can any of the company-specific risk be diversified away by investing in both Aam/himco Short and Western Asset 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 Aam/himco Short and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aamhimco Short Duration and Western Asset Total, you can compare the effects of market volatilities on Aam/himco Short and Western Asset 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 Aam/himco Short with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam/himco Short and Western Asset.

Diversification Opportunities for Aam/himco Short and Western Asset

0.41

Correlation Coefficient

Aam/himco Short  Western Asset

Very weak diversification

The 3 months correlation between Aam/himco and Western is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Aamhimco Short Duration and Western Asset Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Total and Aam/himco Short 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 Aamhimco Short Duration are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Total has no effect on the direction of Aam/himco Short i.e., Aam/himco Short and Western Asset go up and down completely randomly.

Pair Corralation between Aam/himco Short and Western Asset

Assuming the 90 days horizon Aam/himco Short is expected to generate 1.12 times less return on investment than Western Asset. But when comparing it to its historical volatility, Aamhimco Short Duration is 2.39 times less risky than Western Asset. It trades about 0.19 of its potential returns per unit of risk. Western Asset Total is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  891.00  in Western Asset Total on October 25, 2024 and sell it today you would earn a total of  9.00  from holding Western Asset Total or generate 1.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Aamhimco Short Duration  vs.  Western Asset Total

Aamhimco Short Duration

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aamhimco Short Duration are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aam/himco Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Asset Total

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Total are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Western Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aam/himco Short and Western Asset

The main advantage of trading using opposite Aam/himco Short and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aam/himco Short position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.

The idea behind Aamhimco Short Duration and Western Asset Total pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.