Correlation Between Stone Harbor and Western Asset
Can any of the company-specific risk be diversified away by investing in both Stone Harbor 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 Stone Harbor and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stone Harbor Emerging and Western Asset High, you can compare the effects of market volatilities on Stone Harbor 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 Stone Harbor with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Harbor and Western Asset.
Diversification Opportunities for Stone Harbor and Western Asset
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Stone and Western is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Stone Harbor Emerging 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 Stone Harbor 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 Stone Harbor Emerging 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 Stone Harbor i.e., Stone Harbor and Western Asset go up and down completely randomly.
Pair Corralation between Stone Harbor and Western Asset
Considering the 90-day investment horizon Stone Harbor is expected to generate 10.13 times less return on investment than Western Asset. In addition to that, Stone Harbor is 1.69 times more volatile than Western Asset High. It trades about 0.01 of its total potential returns per unit of risk. Western Asset High is currently generating about 0.11 per unit of volatility. If you would invest 439.00 in Western Asset High on September 12, 2024 and sell it today you would earn a total of 8.00 from holding Western Asset High or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stone Harbor Emerging vs. Western Asset High
Performance |
| Timeline |
| Stone Harbor Emerging |
| Western Asset High |
Stone Harbor and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Harbor and Western Asset
The main advantage of trading using opposite Stone Harbor and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Harbor 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.| Stone Harbor vs. Oxford Lane Capital | Stone Harbor vs. Orchid Island Capital | Stone Harbor vs. Guggenheim Strategic Opportunities |
| Western Asset vs. Oxford Lane Capital | Western Asset vs. Orchid Island Capital | Western Asset vs. Guggenheim Strategic Opportunities | Western Asset vs. Stone Harbor Emerging |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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