Correlation Between Enhanced and Western Asset
Can any of the company-specific risk be diversified away by investing in both Enhanced 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 Enhanced and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Enhanced Large Pany and Western Asset E, you can compare the effects of market volatilities on Enhanced 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 Enhanced with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enhanced and Western Asset.
Diversification Opportunities for Enhanced and Western Asset
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Enhanced and Western is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Enhanced Large Pany and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E and Enhanced 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 Enhanced Large Pany 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 E has no effect on the direction of Enhanced i.e., Enhanced and Western Asset go up and down completely randomly.
Pair Corralation between Enhanced and Western Asset
Assuming the 90 days horizon Enhanced Large Pany is expected to generate 1.8 times more return on investment than Western Asset. However, Enhanced is 1.8 times more volatile than Western Asset E. It trades about 0.11 of its potential returns per unit of risk. Western Asset E is currently generating about 0.02 per unit of risk. If you would invest 1,001 in Enhanced Large Pany on August 29, 2024 and sell it today you would earn a total of 553.00 from holding Enhanced Large Pany or generate 55.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Enhanced Large Pany vs. Western Asset E
Performance |
| Timeline |
| Enhanced Large Pany |
| Western Asset E |
Enhanced and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Enhanced and Western Asset
The main advantage of trading using opposite Enhanced and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enhanced 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.| Enhanced vs. Vanguard Total Stock | Enhanced vs. Vanguard 500 Index | Enhanced vs. Vanguard Total Stock | Enhanced vs. Vanguard Total Stock |
| Western Asset vs. Hartford Moderate Allocation | Western Asset vs. Enhanced Large Pany | Western Asset vs. Aqr Large Cap | Western Asset vs. Washington Mutual Investors |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |