Correlation Between Western Asset and Voya Emerging
Can any of the company-specific risk be diversified away by investing in both Western Asset and Voya Emerging 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 Voya Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Global and Voya Emerging Markets, you can compare the effects of market volatilities on Western Asset and Voya Emerging 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 Voya Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Voya Emerging.
Diversification Opportunities for Western Asset and Voya Emerging
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Voya is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Voya Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Emerging Markets 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 Global are associated (or correlated) with Voya Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Emerging Markets has no effect on the direction of Western Asset i.e., Western Asset and Voya Emerging go up and down completely randomly.
Pair Corralation between Western Asset and Voya Emerging
Considering the 90-day investment horizon Western Asset Global is expected to generate 0.68 times more return on investment than Voya Emerging. However, Western Asset Global is 1.46 times less risky than Voya Emerging. It trades about 0.08 of its potential returns per unit of risk. Voya Emerging Markets is currently generating about -0.2 per unit of risk. If you would invest 658.00 in Western Asset Global on August 31, 2024 and sell it today you would earn a total of 7.00 from holding Western Asset Global or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Global vs. Voya Emerging Markets
Performance |
| Timeline |
| Western Asset Global |
| Voya Emerging Markets |
Western Asset and Voya Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Voya Emerging
The main advantage of trading using opposite Western Asset and Voya Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Voya Emerging 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 Voya Emerging will offset losses from the drop in Voya Emerging's long position.| Western Asset vs. MFS Investment Grade | Western Asset vs. Eaton Vance Municipal | Western Asset vs. DTF Tax Free | Western Asset vs. HUMANA INC |
| Voya Emerging vs. Nuveen Real Asset | Voya Emerging vs. Nuveen Mortgage Opportunity | Voya Emerging vs. Pgim Global High | Voya Emerging vs. Nuveen Core 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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