Correlation Between Western Asset and Nuveen Strategic
Can any of the company-specific risk be diversified away by investing in both Western Asset and Nuveen Strategic 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 Nuveen Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Total and Nuveen Strategic Municipal, you can compare the effects of market volatilities on Western Asset and Nuveen Strategic 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 Nuveen Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Nuveen Strategic.
Diversification Opportunities for Western Asset and Nuveen Strategic
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Nuveen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Total and Nuveen Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Strategic Mun 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 Total are associated (or correlated) with Nuveen Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Strategic Mun has no effect on the direction of Western Asset i.e., Western Asset and Nuveen Strategic go up and down completely randomly.
Pair Corralation between Western Asset and Nuveen Strategic
Assuming the 90 days horizon Western Asset Total is expected to generate 0.7 times more return on investment than Nuveen Strategic. However, Western Asset Total is 1.44 times less risky than Nuveen Strategic. It trades about 0.33 of its potential returns per unit of risk. Nuveen Strategic Municipal is currently generating about 0.09 per unit of risk. If you would invest 892.00 in Western Asset Total on December 21, 2024 and sell it today you would earn a total of 29.00 from holding Western Asset Total or generate 3.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Western Asset Total vs. Nuveen Strategic Municipal
Performance |
Timeline |
Western Asset Total |
Nuveen Strategic Mun |
Western Asset and Nuveen Strategic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Asset and Nuveen Strategic
The main advantage of trading using opposite Western Asset and Nuveen Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Nuveen Strategic 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 Nuveen Strategic will offset losses from the drop in Nuveen Strategic's long position.Western Asset vs. Fidelity Government Money | Western Asset vs. Hewitt Money Market | Western Asset vs. Money Market Obligations | Western Asset vs. Franklin Government Money |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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