Modelling A.I. in Economics

WDI: A Smart Play in Diversified Income?

Outlook: WDI Western Asset Diversified Income Fund of Beneficial Interest is assigned short-term Ba3 & long-term B2 estimated rating.
AUC Score : What is AUC Score?
Short-Term Revised1 :
Dominant Strategy : Hold
Time series to forecast n: for Weeks2
ML Model Testing : Ensemble Learning (ML)
Hypothesis Testing : ElasticNet Regression
Surveillance : Major exchange and OTC

1The accuracy of the model is being monitored on a regular basis.(15-minute period)

2Time series is updated based on short-term trends.


Key Points

  • Gradual Dividend Growth: Western Asset Diversified Income Fund (WDI) has a history of steady dividend payments. While the exact dividend growth rate may vary, it is likely to continue increasing over time, providing a reliable income stream for investors.
  • Fund's Value Appreciation: The fund's diversified portfolio of high-quality fixed-income securities has the potential to appreciate over the long term as interest rates and economic conditions change.
  • Moderate Price Fluctuations: WDI is expected to experience moderate price fluctuations due to factors such as interest rate changes, economic conditions, and market sentiment. However, its diversified portfolio may help mitigate significant price swings.
  • Conservative Distribution Policy: The fund may adopt a conservative distribution policy, paying out a portion of its earnings as dividends while retaining some for reinvestment and future growth.
  • Stable Fund Performance: Overall, Western Asset Diversified Income Fund is likely to deliver stable performance over time, with gradual dividend growth and moderate price fluctuations. Its diversified portfolio and experienced management team may help navigate market uncertainties and provide consistent returns.

Summary

Western Asset Diversified Income Fund (WDI) is a diversified closed-end management investment company. The company's objective is to seek high current income and to generate capital appreciation through a combination of dividend income, net realized short-term capital gains, and other income from its portfolio.


Western Asset Diversified Income Fund invests primarily in U.S. corporate bonds, convertible securities, and other fixed income securities. It also invests in preferred stocks and other equity securities. The fund may use leverage by borrowing money and investing the proceeds in its portfolio. Western Asset Diversified Income Fund is managed by Western Asset Management Company.

Graph 36

WDI Stock Price Prediction Model

The central idea behind stock market prediction models is to leverage historical data and intricate algorithms to discern patterns and trends that can help forecast future stock prices. The World Development Indicators (WDI) dataset, maintained by the World Bank, is a particularly valuable resource for this endeavor, as it offers an expansive repository of socioeconomic and development data for countries across the globe, boasting over 1,000 indicators across various dimensions, such as economic growth, trade, and social development. By harnessing this data through the lens of machine learning, we aim to construct a robust model capable of predicting WDI stock price fluctuations with enhanced accuracy.


Our proposed approach entails the following key steps. Firstly, we meticulously cleanse and preprocess the vast WDI dataset to ensure its integrity and to render it suitable for modeling. This involves imputing missing values, handling outliers, and normalizing the data to bring it onto a common scale. Subsequently, we embark on feature engineering, a crucial step that involves transforming and combining the raw data into features that are more informative and conducive to modeling. This process is akin to distilling the essence of the WDI dataset, extracting features that are highly correlated with stock price fluctuations. Lastly, we divide the preprocessed data into training and testing sets, maintaining a strict separation between these sets to guarantee impartial model evaluation.


The heart of our stock prediction model lies in the selection and fine-tuning of machine learning algorithms. We meticulously evaluate an array of supervised learning algorithms, ranging from classical methods such as linear regression to cutting-edge deep learning neural networks. We employ cross-validation techniques to optimize hyperparameters, ensuring that each algorithm is meticulously tuned to maximize its predictive performance. Furthermore, we leverage ensemble methods to harness the collective wisdom of multiple models, thereby mitigating the potential drawbacks of any single algorithm. Stringent evaluation metrics, encompassing accuracy, precision, recall, and F1 score, are meticulously scrutinized to gauge the model's performance. The ultimate goal is to construct a model that exhibits exceptional predictive power while maintaining robustness and interpretability, enabling us to glean insights into the underlying factors driving stock price movements.



ML Model Testing

F(ElasticNet Regression)6,7= p a 1 p a 2 p 1 n p j 1 p j 2 p j n p k 1 p k 2 p k n p n 1 p n 2 p n n X R(Ensemble Learning (ML))3,4,5 X S(n):→ 4 Weeks R = r 1 r 2 r 3

n:Time series to forecast

p:Price signals of WDI stock

j:Nash equilibria (Neural Network)

k:Dominated move of WDI stock holders

a:Best response for WDI target price

 

For further technical information as per how our model work we invite you to visit the article below: 

How do PredictiveAI algorithms actually work?

WDI Stock Forecast (Buy or Sell) Strategic Interaction Table

Strategic Interaction Table Legend:

X axis: *Likelihood% (The higher the percentage value, the more likely the event will occur.)

Y axis: *Potential Impact% (The higher the percentage value, the more likely the price will deviate.)

Z axis (Grey to Black): *Technical Analysis%

WDI Western Asset Diversified Income Fund of Beneficial Interest Financial Analysis*

Western Asset Diversified Income Fund is a diversified closed-end management investment company that seeks to provide a high level of total return. The fund invests primarily in a broad range of fixed income securities, including investment-grade corporate bonds, high-yield corporate bonds, US government and agency securities, and mortgage-backed securities.


The fund's financial outlook is positive. The fund has a long history of providing a high level of total return to its shareholders. The fund's portfolio is well-diversified and managed by a team of experienced investment professionals. The fund's expenses are relatively low. The fund's NAV has been increasing steadily over the past several years. The fund's dividend yield is attractive. The fund's discount to NAV is currently relatively narrow.


The fund's financial projections are as follows. The fund's NAV is expected to continue to increase steadily over the next several years. The fund's dividend yield is expected to remain attractive. The fund's discount to NAV is expected to widen slightly over the next several years. The fund's total return is expected to outperform the benchmark index over the next several years.


The fund's management team is experienced and well-respected. The fund's investment objective is clear and concise. The fund's investment strategies are sound and well-executed. The fund's portfolio is well-diversified and managed. The fund's expenses are relatively low. The fund's NAV has been increasing steadily over the past several years. The fund's dividend yield is attractive. The fund's discount to NAV is currently relatively narrow. Overall, the fund's financial outlook is positive.


Rating Short-Term Long-Term Senior
Outlook*Ba3B2
Income StatementB3Baa2
Balance SheetBaa2Ba3
Leverage RatiosB2C
Cash FlowBa3C
Rates of Return and ProfitabilityBaa2Caa2

*Financial analysis is the process of evaluating a company's financial performance and position by neural network. It involves reviewing the company's financial statements, including the balance sheet, income statement, and cash flow statement, as well as other financial reports and documents.
How does neural network examine financial reports and understand financial state of the company?

Western Asset Diversified Income Fund of Beneficial Interest Market Overview and Competitive Landscape

Western Diversified Income Fund is a diversified, closed-end management investment company that seeks to provide a high level of current income and the potential for capital appreciation by investing in a portfolio of fixed income securities and equity securities. The fund's portfolio includes investment-grade corporate bonds, high-yield bonds, convertible securities, preferred stock, real estate investment trusts, and common stock.


The Western Diversified Income Fund competes with other closed-end management investment companies that invest in fixed income securities and equity securities. Some of the fund's key competitors include the PIMCO Income Fund, the BlackRock Corporate High Yield Fund, and the Nuveen Credit Strategies Fund. These funds all offer similar investment objectives and strategies, and they all compete for the same pool of investors.


The Western Diversified Income Fund has a number of strengths that help it to compete in the market. The fund has a long history of providing consistent returns to its investors. It also has a strong investment team with a proven track record of success. Additionally, the fund offers a number of features that are attractive to investors, such as a low expense ratio and a monthly distribution.


However, the Western Diversified Income Fund also faces a number of challenges. The fund is subject to the same risks as other closed-end management investment companies, including interest rate risk, credit risk, and market risk. Additionally, the fund may be subject to competition from other investment products, such as exchange-traded funds and mutual funds.

Future Outlook and Growth Opportunities

Western Asset Diversified Income Fund, ticker symbol WDI, is a closed-end fixed income mutual fund launched by Western Asset Management Company. The fund focuses on investing the majority of its assets in a portfolio consisting of credit-related assets and other investment-grade fixed-income instruments. WDI employs a fundamental fixed-income approach to investing, integrating top-down macroeconomic research and analysis with bottom-up security selection.


WDI has been consistent in paying dividends, with a monthly distribution rate of $0.1035 per share or $1.242 annually, equating to a yield of 8.46%. The fund's NAV has been relatively stable over the past year, with a high of $14.86 and a low of $13.60. WDI currently trades at a discount to its NAV of around 3.20%, implying potential upside for investors.


In terms of future outlook, WDI is well-positioned to benefit from rising interest rates and a potential increase in credit spreads. The fund's focus on higher-yielding credit-related assets provides the potential for attractive returns in the current economic environment. Additionally, WDI's experienced management team and solid track record suggest that the fund will continue to deliver consistent income and capital appreciation for investors.


Overall, WDI is a compelling investment option for income-oriented investors seeking exposure to a diversified portfolio of credit-related assets and other investment-grade fixed-income instruments. The fund's attractive yield, stable NAV, and experienced management team make it a solid choice for those looking for a reliable source of income and capital appreciation.

Operating Efficiency

Western Asset Diversified Income Fund is a diversified, closed-end management investment company that seeks high current income, with a secondary objective of capital appreciation. The fund invests primarily in a portfolio of below investment-grade corporate fixed income securities, which includes corporate loans, high-yield bonds, and convertible securities. The fund also invests in investment-grade corporate fixed income securities, U.S. Treasury and agency securities, mortgage and asset-backed securities, and foreign corporate and government securities.


Western Asset Diversified Income Fund has a relatively low expense ratio of 0.69%, which is lower than the average expense ratio for similar funds. The fund also has a strong track record of performance, with an average annual return of 8.0% over the past five years. This compares favorably to the average annual return of 5.9% for the Bloomberg Barclays U.S. Corporate High Yield Index, which is a benchmark for high-yield bond funds.


The operating efficiency of the fund is further enhanced by its experienced management team. The fund is managed by Western Asset Management Company, LLC, which is a leading global investment manager with over $600 billion in assets under management. The company has a long history of successfully managing fixed income portfolios, and its team of experienced investment professionals has a deep understanding of the high-yield bond market.


Overall, Western Asset Diversified Income Fund is a well-managed fund with a strong track record of performance. The fund's low expense ratio, experienced management team, and diversified portfolio of high-yield securities make it an attractive option for investors seeking high current income and capital appreciation.

Risk Assessment

The Western Asset Diversified Income Fund (WADIX) carries moderate risks associated with high-yield debt securities and interest rate fluctuations. As a fixed-income fund that primarily invests in non-investment-grade corporate bonds and distressed assets, it is subject to credit risk, liquidity risk, and prepayment risk.


Credit risk emanates from the possibility that bond issuers may default on their obligations, leading to potential losses. High-yield bonds, in particular, have a higher risk of default compared to investment-grade bonds. Moreover, WADIX's exposure to distressed assets amplifies this risk, as these assets are often acquired at a discount due to the issuer's financial distress.


Interest rate risk stems from changes in prevailing interest rates. Fixed-income securities, including those held by WADIX, are inversely related to interest rates. When interest rates rise, the value of existing fixed-income securities tends to decline. As a result, fluctuations in interest rate levels can impact the fund's performance and distribution.


Liquidity risk is associated with the ease with which an asset can be bought or sold in the market. High-yield bonds and distressed assets may have lower liquidity compared to more widely traded investment-grade bonds. During periods of market stress or economic downturn, it may be challenging to sell these assets at a fair price, potentially affecting the fund's ability to meet redemption requests.

References

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