Correlation Between Western Asset and Barings Us
Can any of the company-specific risk be diversified away by investing in both Western Asset and Barings Us 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 Western Asset and Barings Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Adjustable and Barings High Yield, you can compare the effects of market volatilities on Western Asset and Barings Us 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 Western Asset with a short position of Barings Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Barings Us.
Diversification Opportunities for Western Asset and Barings Us
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Barings is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Adjustable and Barings High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barings High Yield and Western Asset 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 Western Asset Adjustable are associated (or correlated) with Barings Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barings High Yield has no effect on the direction of Western Asset i.e., Western Asset and Barings Us go up and down completely randomly.
Pair Corralation between Western Asset and Barings Us
Assuming the 90 days horizon Western Asset is expected to generate 5.31 times less return on investment than Barings Us. But when comparing it to its historical volatility, Western Asset Adjustable is 2.87 times less risky than Barings Us. It trades about 0.1 of its potential returns per unit of risk. Barings High Yield is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 812.00 in Barings High Yield on November 4, 2024 and sell it today you would earn a total of 5.00 from holding Barings High Yield or generate 0.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Western Asset Adjustable vs. Barings High Yield
Performance |
| Timeline |
| Western Asset Adjustable |
| Barings High Yield |
Western Asset and Barings Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Barings Us
The main advantage of trading using opposite Western Asset and Barings Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Barings Us 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 Barings Us will offset losses from the drop in Barings Us' long position.| Western Asset vs. Western Asset Adjustable | Western Asset vs. Short Term Fund A | Western Asset vs. Western Asset Mortgage | Western Asset vs. Western Asset Intermediate Term |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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