Correlation Between Cutler Equity and Western Asset
Can any of the company-specific risk be diversified away by investing in both Cutler Equity 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 Cutler Equity and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cutler Equity and Western Asset Total, you can compare the effects of market volatilities on Cutler Equity 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 Cutler Equity with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cutler Equity and Western Asset.
Diversification Opportunities for Cutler Equity and Western Asset
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cutler and WESTERN is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cutler Equity and Western Asset Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Total and Cutler Equity 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 Cutler Equity 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 Total has no effect on the direction of Cutler Equity i.e., Cutler Equity and Western Asset go up and down completely randomly.
Pair Corralation between Cutler Equity and Western Asset
Assuming the 90 days horizon Cutler Equity is expected to generate 3.72 times more return on investment than Western Asset. However, Cutler Equity is 3.72 times more volatile than Western Asset Total. It trades about 0.3 of its potential returns per unit of risk. Western Asset Total is currently generating about 0.24 per unit of risk. If you would invest 2,805 in Cutler Equity on August 31, 2024 and sell it today you would earn a total of 134.00 from holding Cutler Equity or generate 4.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cutler Equity vs. Western Asset Total
Performance |
| Timeline |
| Cutler Equity |
| Western Asset Total |
Cutler Equity and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cutler Equity and Western Asset
The main advantage of trading using opposite Cutler Equity and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cutler Equity 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.| Cutler Equity vs. Blrc Sgy Mnp | Cutler Equity vs. Ambrus Core Bond | Cutler Equity vs. Federated Ohio Municipal | Cutler Equity vs. Legg Mason Partners |
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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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