Correlation Between Western Asset and Auburn Bancorp
Can any of the company-specific risk be diversified away by investing in both Western Asset and Auburn Bancorp 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 Auburn Bancorp 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 Auburn Bancorp, you can compare the effects of market volatilities on Western Asset and Auburn Bancorp 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 Auburn Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Auburn Bancorp.
Diversification Opportunities for Western Asset and Auburn Bancorp
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Auburn is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Auburn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn Bancorp 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 Auburn Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn Bancorp has no effect on the direction of Western Asset i.e., Western Asset and Auburn Bancorp go up and down completely randomly.
Pair Corralation between Western Asset and Auburn Bancorp
Considering the 90-day investment horizon Western Asset Global is expected to generate 0.49 times more return on investment than Auburn Bancorp. However, Western Asset Global is 2.05 times less risky than Auburn Bancorp. It trades about 0.1 of its potential returns per unit of risk. Auburn Bancorp is currently generating about -0.03 per unit of risk. If you would invest 1,023 in Western Asset Global on September 4, 2024 and sell it today you would earn a total of 147.00 from holding Western Asset Global or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Western Asset Global vs. Auburn Bancorp
Performance |
| Timeline |
| Western Asset Global |
| Auburn Bancorp |
Western Asset and Auburn Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Auburn Bancorp
The main advantage of trading using opposite Western Asset and Auburn Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Auburn Bancorp 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 Auburn Bancorp will offset losses from the drop in Auburn Bancorp's long position.| Western Asset vs. Western Asset High | Western Asset vs. Western Asset Global | Western Asset vs. European Equity Closed | Western Asset vs. Doubleline Opportunistic Credit |
| Auburn Bancorp vs. Andover Bancorp | Auburn Bancorp vs. Aozora Bank Ltd | Auburn Bancorp vs. Absa Group Limited |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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