Correlation Between Ambrus Core and Western Asset

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Can any of the company-specific risk be diversified away by investing in both Ambrus Core 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 Ambrus Core and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ambrus Core Bond and Western Asset Municipal, you can compare the effects of market volatilities on Ambrus Core 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 Ambrus Core with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ambrus Core and Western Asset.

Diversification Opportunities for Ambrus Core and Western Asset

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Ambrus and Western is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ambrus Core Bond and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and Ambrus Core 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 Ambrus Core Bond 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 Municipal has no effect on the direction of Ambrus Core i.e., Ambrus Core and Western Asset go up and down completely randomly.

Pair Corralation between Ambrus Core and Western Asset

Assuming the 90 days horizon Ambrus Core Bond is expected to generate 0.6 times more return on investment than Western Asset. However, Ambrus Core Bond is 1.67 times less risky than Western Asset. It trades about -0.09 of its potential returns per unit of risk. Western Asset Municipal is currently generating about -0.1 per unit of risk. If you would invest  1,007  in Ambrus Core Bond on September 15, 2024 and sell it today you would lose (10.00) from holding Ambrus Core Bond or give up 0.99% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Ambrus Core Bond  vs.  Western Asset Municipal

 Performance 
       Timeline  
Ambrus Core Bond 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ambrus Core Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Ambrus Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Western Asset Municipal 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Western Asset Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Western Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ambrus Core and Western Asset Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ambrus Core and Western Asset

The main advantage of trading using opposite Ambrus Core and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ambrus Core 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 Ambrus Core Bond and Western Asset Municipal 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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