Correlation Between Western Asset and Allspring Income

Can any of the company-specific risk be diversified away by investing in both Western Asset and Allspring Income 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 Allspring Income into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Western Asset Diversified and Allspring Income Opportunities, you can compare the effects of market volatilities on Western Asset and Allspring Income 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 Allspring Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Allspring Income.

Diversification Opportunities for Western Asset and Allspring Income

0.48

Correlation Coefficient

Western Asset  Allspring Income

Very weak diversification

The 3 months correlation between Western and Allspring is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Allspring Income Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allspring Income Opp 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 Diversified are associated (or correlated) with Allspring Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allspring Income Opp has no effect on the direction of Western Asset i.e., Western Asset and Allspring Income go up and down completely randomly.

Pair Corralation between Western Asset and Allspring Income

Considering the 90-day investment horizon Western Asset Diversified is expected to under-perform the Allspring Income. In addition to that, Western Asset is 1.1 times more volatile than Allspring Income Opportunities. It trades about -0.03 of its total potential returns per unit of risk. Allspring Income Opportunities is currently generating about 0.04 per unit of volatility. If you would invest  691.00  in Allspring Income Opportunities on September 14, 2024 and sell it today you would earn a total of  9.00  from holding Allspring Income Opportunities or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Western Asset Diversified  vs.  Allspring Income Opportunities

Western Asset Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset Diversified has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Western Asset is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Allspring Income Opp

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allspring Income Opportunities are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Allspring Income is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Western Asset and Allspring Income

The main advantage of trading using opposite Western Asset and Allspring Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Allspring Income 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 Allspring Income will offset losses from the drop in Allspring Income's long position.

The idea behind Western Asset Diversified and Allspring Income Opportunities 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..