Correlation Between FFW and Western Asset
Can any of the company-specific risk be diversified away by investing in both FFW 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 FFW and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FFW Corporation and Western Asset Global, you can compare the effects of market volatilities on FFW 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 FFW with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of FFW and Western Asset.
Diversification Opportunities for FFW and Western Asset
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between FFW and Western is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding FFW Corp. and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global and FFW 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 FFW Corporation 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 Global has no effect on the direction of FFW i.e., FFW and Western Asset go up and down completely randomly.
Pair Corralation between FFW and Western Asset
Given the investment horizon of 90 days FFW Corporation is expected to generate 1.19 times more return on investment than Western Asset. However, FFW is 1.19 times more volatile than Western Asset Global. It trades about -0.09 of its potential returns per unit of risk. Western Asset Global is currently generating about -0.11 per unit of risk. If you would invest 4,000 in FFW Corporation on September 12, 2024 and sell it today you would lose (50.00) from holding FFW Corporation or give up 1.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
FFW Corp. vs. Western Asset Global
Performance |
| Timeline |
| FFW Corporation |
| Western Asset Global |
FFW and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FFW and Western Asset
The main advantage of trading using opposite FFW and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FFW 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.| FFW vs. First Farmers Financial | FFW vs. Farmers Merchants Bancorp | FFW vs. Lakeland Financial | FFW vs. Eagle Financial Services |
| Western Asset vs. Western Asset High | Western Asset vs. Western Asset Global | Western Asset vs. European Equity Closed | Western Asset vs. Doubleline Opportunistic Credit |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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