Correlation Between Western Asset and Gmo Us
Can any of the company-specific risk be diversified away by investing in both Western Asset and Gmo Us 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 Gmo Us 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 Gmo Treasury Fund, you can compare the effects of market volatilities on Western Asset and Gmo Us 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 Gmo Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Gmo Us.
Diversification Opportunities for Western Asset and Gmo Us
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Gmo is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Gmo Treasury Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Treasury 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 Gmo Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Treasury has no effect on the direction of Western Asset i.e., Western Asset and Gmo Us go up and down completely randomly.
Pair Corralation between Western Asset and Gmo Us
Assuming the 90 days horizon Western Asset Municipal is expected to under-perform the Gmo Us. In addition to that, Western Asset is 3.19 times more volatile than Gmo Treasury Fund. It trades about -0.08 of its total potential returns per unit of risk. Gmo Treasury Fund is currently generating about 0.25 per unit of volatility. If you would invest 495.00 in Gmo Treasury Fund on December 27, 2024 and sell it today you would earn a total of 6.00 from holding Gmo Treasury Fund or generate 1.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Western Asset Municipal vs. Gmo Treasury Fund
Performance |
Timeline |
Western Asset Municipal |
Gmo Treasury |
Western Asset and Gmo Us Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Asset and Gmo Us
The main advantage of trading using opposite Western Asset and Gmo Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Gmo Us 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 Gmo Us will offset losses from the drop in Gmo Us' long position.Western Asset vs. Diversified Bond Fund | Western Asset vs. Fidelity Advisor Diversified | Western Asset vs. Lord Abbett Diversified | Western Asset vs. Invesco Diversified Dividend |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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