Correlation Between Western Asset and Ab Select
Can any of the company-specific risk be diversified away by investing in both Western Asset and Ab Select 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 Ab Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Short and Ab Select Longshort, you can compare the effects of market volatilities on Western Asset and Ab Select 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 Ab Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Ab Select.
Diversification Opportunities for Western Asset and Ab Select
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and ASCLX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Short and Ab Select Longshort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Select Longshort 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 Short are associated (or correlated) with Ab Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Select Longshort has no effect on the direction of Western Asset i.e., Western Asset and Ab Select go up and down completely randomly.
Pair Corralation between Western Asset and Ab Select
Assuming the 90 days horizon Western Asset is expected to generate 2.74 times less return on investment than Ab Select. But when comparing it to its historical volatility, Western Asset Short is 4.17 times less risky than Ab Select. It trades about 0.36 of its potential returns per unit of risk. Ab Select Longshort is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,302 in Ab Select Longshort on June 8, 2025 and sell it today you would earn a total of 65.00 from holding Ab Select Longshort or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Short vs. Ab Select Longshort
Performance |
| Timeline |
| Western Asset Short |
| Ab Select Longshort |
Western Asset and Ab Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Ab Select
The main advantage of trading using opposite Western Asset and Ab Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Ab Select 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 Ab Select will offset losses from the drop in Ab Select's long position.| Western Asset vs. Aig Government Money | Western Asset vs. Us Government Securities | Western Asset vs. Franklin Adjustable Government | Western Asset vs. Blackrock Government Bond |
| Ab Select vs. Ab Global E | Ab Select vs. Ab Global E | Ab Select vs. Ab Global E | Ab Select vs. Ab All Market |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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