Correlation Between Jhancock Short and Western Asset

Can any of the company-specific risk be diversified away by investing in both Jhancock 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 Jhancock 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 Jhancock Short Duration and Western Asset Short, you can compare the effects of market volatilities on Jhancock 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 Jhancock Short with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jhancock Short and Western Asset.

Diversification Opportunities for Jhancock Short and Western Asset

0.93

Correlation Coefficient

Jhancock Short  Western Asset

Almost no diversification

The 3 months correlation between Jhancock and Western is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Jhancock Short Duration and Western Asset Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Short and Jhancock 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 Jhancock 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 Short has no effect on the direction of Jhancock Short i.e., Jhancock Short and Western Asset go up and down completely randomly.

Pair Corralation between Jhancock Short and Western Asset

Assuming the 90 days horizon Jhancock Short Duration is expected to generate 1.29 times more return on investment than Western Asset. However, Jhancock Short is 1.29 times more volatile than Western Asset Short. It trades about 0.23 of its potential returns per unit of risk. Western Asset Short is currently generating about 0.13 per unit of risk. If you would invest  921.00  in Jhancock Short Duration on December 23, 2024 and sell it today you would earn a total of  17.00  from holding Jhancock Short Duration or generate 1.85% return on investment over 90 days.

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

Jhancock Short Duration  vs.  Western Asset Short

Jhancock Short Duration

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jhancock Short Duration are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Jhancock Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Asset Short

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Short are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, 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 Jhancock Short and Western Asset

The main advantage of trading using opposite Jhancock Short and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jhancock 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 Jhancock Short Duration and Western Asset Short 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.