Correlation Between Cardano and Western Asset
Can any of the company-specific risk be diversified away by investing in both Cardano and Western Asset 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 Cardano and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cardano and Western Asset Short, you can compare the effects of market volatilities on Cardano and Western Asset 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 Cardano with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cardano and Western Asset.
Diversification Opportunities for Cardano and Western Asset
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cardano and Western is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Western Asset Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Short and Cardano 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 Cardano are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Short has no effect on the direction of Cardano i.e., Cardano and Western Asset go up and down completely randomly.
Pair Corralation between Cardano and Western Asset
Assuming the 90 days trading horizon Cardano is expected to under-perform the Western Asset. In addition to that, Cardano is 50.9 times more volatile than Western Asset Short. It trades about -0.11 of its total potential returns per unit of risk. Western Asset Short is currently generating about -0.16 per unit of volatility. If you would invest 502.00 in Western Asset Short on October 12, 2024 and sell it today you would lose (2.00) from holding Western Asset Short or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Cardano vs. Western Asset Short
Performance |
| Timeline |
| Cardano |
| Western Asset Short |
Cardano and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cardano and Western Asset
The main advantage of trading using opposite Cardano and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardano position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.The idea behind Cardano and Western Asset Short 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.| Western Asset vs. Great West Loomis Sayles | Western Asset vs. Valic Company I | Western Asset vs. Ultrasmall Cap Profund Ultrasmall Cap | Western Asset vs. Fidelity Small Cap |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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