Correlation Between Western Asset and Wisdomtree Siegel
Can any of the company-specific risk be diversified away by investing in both Western Asset and Wisdomtree Siegel 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 Wisdomtree Siegel 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 Wisdomtree Siegel Global, you can compare the effects of market volatilities on Western Asset and Wisdomtree Siegel 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 Wisdomtree Siegel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Wisdomtree Siegel.
Diversification Opportunities for Western Asset and Wisdomtree Siegel
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Wisdomtree is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Adjustable and Wisdomtree Siegel Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wisdomtree Siegel Global 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 Wisdomtree Siegel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wisdomtree Siegel Global has no effect on the direction of Western Asset i.e., Western Asset and Wisdomtree Siegel go up and down completely randomly.
Pair Corralation between Western Asset and Wisdomtree Siegel
Assuming the 90 days horizon Western Asset is expected to generate 26.74 times less return on investment than Wisdomtree Siegel. But when comparing it to its historical volatility, Western Asset Adjustable is 11.7 times less risky than Wisdomtree Siegel. It trades about 0.1 of its potential returns per unit of risk. Wisdomtree Siegel Global is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,154 in Wisdomtree Siegel Global on November 5, 2024 and sell it today you would earn a total of 34.00 from holding Wisdomtree Siegel Global or generate 2.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Adjustable vs. Wisdomtree Siegel Global
Performance |
| Timeline |
| Western Asset Adjustable |
| Wisdomtree Siegel Global |
Western Asset and Wisdomtree Siegel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Wisdomtree Siegel
The main advantage of trading using opposite Western Asset and Wisdomtree Siegel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Wisdomtree Siegel 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 Wisdomtree Siegel will offset losses from the drop in Wisdomtree Siegel's 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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