Correlation Between Ashmore Group and Western Asset
Can any of the company-specific risk be diversified away by investing in both Ashmore Group 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 Ashmore Group and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ashmore Group Plc and Western Asset Managed, you can compare the effects of market volatilities on Ashmore Group 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 Ashmore Group with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Group and Western Asset.
Diversification Opportunities for Ashmore Group and Western Asset
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ashmore and Western is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Group Plc and Western Asset Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Managed and Ashmore Group 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 Ashmore Group Plc 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 Managed has no effect on the direction of Ashmore Group i.e., Ashmore Group and Western Asset go up and down completely randomly.
Pair Corralation between Ashmore Group and Western Asset
Assuming the 90 days horizon Ashmore Group Plc is expected to under-perform the Western Asset. In addition to that, Ashmore Group is 6.05 times more volatile than Western Asset Managed. It trades about -0.02 of its total potential returns per unit of risk. Western Asset Managed is currently generating about -0.06 per unit of volatility. If you would invest 1,060 in Western Asset Managed on October 20, 2024 and sell it today you would lose (28.00) from holding Western Asset Managed or give up 2.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ashmore Group Plc vs. Western Asset Managed
Performance |
| Timeline |
| Ashmore Group Plc |
| Western Asset Managed |
Ashmore Group and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ashmore Group and Western Asset
The main advantage of trading using opposite Ashmore Group and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Group 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.| Ashmore Group vs. Morgan Stanley China | Ashmore Group vs. Central Europe Russia | Ashmore Group vs. Morgan Stanley India | Ashmore Group vs. Nuveen Missouri Quality |
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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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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