Correlation Between Flow Capital and Western Asset
Can any of the company-specific risk be diversified away by investing in both Flow Capital 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 Flow Capital and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flow Capital Corp and Western Asset Global, you can compare the effects of market volatilities on Flow Capital 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 Flow Capital with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Capital and Western Asset.
Diversification Opportunities for Flow Capital and Western Asset
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Flow and Western is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Flow Capital Corp and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global and Flow Capital 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 Flow Capital Corp 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 Global has no effect on the direction of Flow Capital i.e., Flow Capital and Western Asset go up and down completely randomly.
Pair Corralation between Flow Capital and Western Asset
Assuming the 90 days horizon Flow Capital Corp is expected to under-perform the Western Asset. But the pink sheet apears to be less risky and, when comparing its historical volatility, Flow Capital Corp is 1.64 times less risky than Western Asset. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Western Asset Global is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,173 in Western Asset Global on September 5, 2024 and sell it today you would earn a total of 1.00 from holding Western Asset Global or generate 0.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Flow Capital Corp vs. Western Asset Global
Performance |
| Timeline |
| Flow Capital Corp |
| Western Asset Global |
Flow Capital and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flow Capital and Western Asset
The main advantage of trading using opposite Flow Capital and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flow Capital 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.| Flow Capital vs. Western Asset Global | Flow Capital vs. Invesco Trust For | Flow Capital vs. Logan Ridge Finance | Flow Capital vs. Invesco Advantage MIT |
| Western Asset vs. Western Asset High | Western Asset vs. Western Asset Global | Western Asset vs. European Equity Closed | Western Asset vs. Doubleline Opportunistic Credit |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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