Correlation Between Central Europe and Western Asset
Can any of the company-specific risk be diversified away by investing in both Central Europe 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 Central Europe and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Europe Russia and Western Asset High, you can compare the effects of market volatilities on Central Europe 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 Central Europe with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Europe and Western Asset.
Diversification Opportunities for Central Europe and Western Asset
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Central and Western is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Central Europe Russia and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High and Central Europe 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 Central Europe Russia 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 High has no effect on the direction of Central Europe i.e., Central Europe and Western Asset go up and down completely randomly.
Pair Corralation between Central Europe and Western Asset
Considering the 90-day investment horizon Central Europe Russia is expected to generate 2.61 times more return on investment than Western Asset. However, Central Europe is 2.61 times more volatile than Western Asset High. It trades about 0.07 of its potential returns per unit of risk. Western Asset High is currently generating about 0.08 per unit of risk. If you would invest 801.00 in Central Europe Russia on November 3, 2024 and sell it today you would earn a total of 450.00 from holding Central Europe Russia or generate 56.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Europe Russia vs. Western Asset High
Performance |
| Timeline |
| Central Europe Russia |
| Western Asset High |
Central Europe and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Europe and Western Asset
The main advantage of trading using opposite Central Europe and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Europe 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.| Central Europe vs. Mexico Closed | Central Europe vs. NXG NextGen Infrastructure | Central Europe vs. Taiwan Closed | Central Europe vs. Japan Smaller Capitalization |
| Western Asset vs. Western Asset Global | Western Asset vs. Western Asset High | Western Asset vs. Voya Global Advantage | Western Asset vs. Voya Global Equity |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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