Correlation Between Western Asset and Short Real
Can any of the company-specific risk be diversified away by investing in both Western Asset and Short Real 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 Short Real 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 Short Real Estate, you can compare the effects of market volatilities on Western Asset and Short Real 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 Short Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Short Real.
Diversification Opportunities for Western Asset and Short Real
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Short is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Short Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Real Estate 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 Short Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Real Estate has no effect on the direction of Western Asset i.e., Western Asset and Short Real go up and down completely randomly.
Pair Corralation between Western Asset and Short Real
Assuming the 90 days horizon Western Asset Municipal is expected to generate 0.24 times more return on investment than Short Real. However, Western Asset Municipal is 4.16 times less risky than Short Real. It trades about 0.24 of its potential returns per unit of risk. Short Real Estate is currently generating about 0.04 per unit of risk. If you would invest 680.00 in Western Asset Municipal on August 19, 2025 and sell it today you would earn a total of 21.00 from holding Western Asset Municipal or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Short Real Estate
Performance |
| Timeline |
| Western Asset Municipal |
Risk-Adjusted Performance
Solid
Weak | Strong |
| Short Real Estate |
Western Asset and Short Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Short Real
The main advantage of trading using opposite Western Asset and Short Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Short Real 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 Short Real will offset losses from the drop in Short Real's long position.| Western Asset vs. T Rowe Price | Western Asset vs. T Rowe Price | Western Asset vs. Franklin Emerging Market | Western Asset vs. Bbh Intermediate Municipal |
| Short Real vs. Aig Government Money | Short Real vs. Us Government Securities | Short Real vs. Goldman Sachs Government | Short Real vs. Virtus Seix Government |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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