Correlation Between Western Asset and Aristotle Funds
Can any of the company-specific risk be diversified away by investing in both Western Asset and Aristotle Funds 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 Aristotle Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Aristotle Funds Series, you can compare the effects of market volatilities on Western Asset and Aristotle Funds 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 Aristotle Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Aristotle Funds.
Diversification Opportunities for Western Asset and Aristotle Funds
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Aristotle is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Aristotle Funds Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aristotle Funds Series 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 Municipal are associated (or correlated) with Aristotle Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aristotle Funds Series has no effect on the direction of Western Asset i.e., Western Asset and Aristotle Funds go up and down completely randomly.
Pair Corralation between Western Asset and Aristotle Funds
Assuming the 90 days horizon Western Asset Municipal is expected to generate 0.31 times more return on investment than Aristotle Funds. However, Western Asset Municipal is 3.21 times less risky than Aristotle Funds. It trades about -0.21 of its potential returns per unit of risk. Aristotle Funds Series is currently generating about -0.43 per unit of risk. If you would invest 724.00 in Western Asset Municipal on September 25, 2024 and sell it today you would lose (9.00) from holding Western Asset Municipal or give up 1.24% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Western Asset Municipal vs. Aristotle Funds Series
Performance |
Timeline |
Western Asset Municipal |
Aristotle Funds Series |
Western Asset and Aristotle Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Asset and Aristotle Funds
The main advantage of trading using opposite Western Asset and Aristotle Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Aristotle Funds 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 Aristotle Funds will offset losses from the drop in Aristotle Funds' long position.Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
Aristotle Funds vs. Franklin High Yield | Aristotle Funds vs. Pace High Yield | Aristotle Funds vs. Western Asset Municipal | Aristotle Funds vs. Doubleline Yield Opportunities |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
CEOs Directory Screen CEOs from public companies around the world | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |