Correlation Between Western Asset and First Trust

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Western Asset and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Mortgage and First Trust, you can compare the effects of market volatilities on Western Asset and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and First Trust.

Diversification Opportunities for Western Asset and First Trust

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Western and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Mortgage and First Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust 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 Mortgage are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust has no effect on the direction of Western Asset i.e., Western Asset and First Trust go up and down completely randomly.

Pair Corralation between Western Asset and First Trust

If you would invest  806.00  in Western Asset Mortgage on December 29, 2023 and sell it today you would earn a total of  112.00  from holding Western Asset Mortgage or generate 13.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Western Asset Mortgage  vs.  First Trust

 Performance 
       Timeline  
Western Asset Mortgage 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Western Asset Mortgage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Western Asset is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
First Trust 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days First Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, First Trust is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Western Asset and First Trust Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Western Asset and First Trust

The main advantage of trading using opposite Western Asset and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.
The idea behind Western Asset Mortgage and First Trust 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.
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

Other Complementary Tools

Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Economic Indicators
Top statistical indicators that provide insights into how an economy is performing
Stock Tickers
Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites
Content Syndication
Quickly integrate customizable finance content to your own investment portal
Premium Stories
Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets