Correlation Between Western Asset and Amg Managers

Can any of the company-specific risk be diversified away by investing in both Western Asset and Amg Managers 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 Amg Managers 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 Amg Managers Lmcg, you can compare the effects of market volatilities on Western Asset and Amg Managers 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 Amg Managers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Amg Managers.

Diversification Opportunities for Western Asset and Amg Managers

-0.57

Correlation Coefficient

Western Asset  Amg Managers

Excellent diversification

The 3 months correlation between Western and Amg is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Amg Managers Lmcg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Managers Lmcg 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 Amg Managers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Managers Lmcg has no effect on the direction of Western Asset i.e., Western Asset and Amg Managers go up and down completely randomly.

Pair Corralation between Western Asset and Amg Managers

Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Amg Managers. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 4.03 times less risky than Amg Managers. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Amg Managers Lmcg is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,681  in Amg Managers Lmcg on September 2, 2024 and sell it today you would earn a total of  275.00  from holding Amg Managers Lmcg or generate 16.36% return on investment over 90 days.

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

Western Asset Diversified  vs.  Amg Managers Lmcg

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 fund investors. In spite of fairly strong forward indicators, Western Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Amg Managers Lmcg

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Managers Lmcg are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Amg Managers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Western Asset and Amg Managers

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

The idea behind Western Asset Diversified and Amg Managers Lmcg 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.