Correlation Between Western Asset and Fpa Crescent
Can any of the company-specific risk be diversified away by investing in both Western Asset and Fpa Crescent 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 Fpa Crescent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and Fpa Crescent, you can compare the effects of market volatilities on Western Asset and Fpa Crescent 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 Fpa Crescent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Fpa Crescent.
Diversification Opportunities for Western Asset and Fpa Crescent
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Fpa is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and Fpa Crescent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fpa Crescent 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 Inflation are associated (or correlated) with Fpa Crescent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fpa Crescent has no effect on the direction of Western Asset i.e., Western Asset and Fpa Crescent go up and down completely randomly.
Pair Corralation between Western Asset and Fpa Crescent
Assuming the 90 days horizon Western Asset Inflation is expected to generate 0.48 times more return on investment than Fpa Crescent. However, Western Asset Inflation is 2.08 times less risky than Fpa Crescent. It trades about 0.16 of its potential returns per unit of risk. Fpa Crescent is currently generating about 0.03 per unit of risk. If you would invest 919.00 in Western Asset Inflation on December 28, 2024 and sell it today you would earn a total of 24.00 from holding Western Asset Inflation or generate 2.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.36% |
Values | Daily Returns |
Western Asset Inflation vs. Fpa Crescent
Performance |
Timeline |
Western Asset Inflation |
Fpa Crescent |
Western Asset and Fpa Crescent Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Asset and Fpa Crescent
The main advantage of trading using opposite Western Asset and Fpa Crescent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Fpa Crescent 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 Fpa Crescent will offset losses from the drop in Fpa Crescent's long position.Western Asset vs. Massmutual Premier Diversified | Western Asset vs. Tax Free Conservative Income | Western Asset vs. Harbor Diversified International | Western Asset vs. Diversified Bond Fund |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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