Correlation Between American Business and Western Asset
Can any of the company-specific risk be diversified away by investing in both American Business 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 American Business and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Business Bk and Western Asset Global, you can compare the effects of market volatilities on American Business 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 American Business with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Business and Western Asset.
Diversification Opportunities for American Business and Western Asset
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between American and Western is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding American Business Bk 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 American Business 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 American Business Bk 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 American Business i.e., American Business and Western Asset go up and down completely randomly.
Pair Corralation between American Business and Western Asset
Given the investment horizon of 90 days American Business Bk is expected to generate 1.8 times more return on investment than Western Asset. However, American Business is 1.8 times more volatile than Western Asset Global. It trades about 0.4 of its potential returns per unit of risk. Western Asset Global is currently generating about -0.19 per unit of risk. If you would invest 3,490 in American Business Bk on September 12, 2024 and sell it today you would earn a total of 924.00 from holding American Business Bk or generate 26.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Business Bk vs. Western Asset Global
Performance |
| Timeline |
| American Business |
| Western Asset Global |
American Business and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Business and Western Asset
The main advantage of trading using opposite American Business and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Business 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.| American Business vs. Private Bancorp of | American Business vs. Avidbank Holdings | American Business vs. Century Next Financial | American Business vs. American Riviera Bank |
| 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |