Correlation Between Western Asset and Bank of Botetourt
Can any of the company-specific risk be diversified away by investing in both Western Asset and Bank of Botetourt 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 Bank of Botetourt 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 Bank of Botetourt, you can compare the effects of market volatilities on Western Asset and Bank of Botetourt 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 Bank of Botetourt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Bank of Botetourt.
Diversification Opportunities for Western Asset and Bank of Botetourt
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Bank is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Bank of Botetourt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Botetourt 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 Bank of Botetourt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Botetourt has no effect on the direction of Western Asset i.e., Western Asset and Bank of Botetourt go up and down completely randomly.
Pair Corralation between Western Asset and Bank of Botetourt
Considering the 90-day investment horizon Western Asset is expected to generate 2.91 times less return on investment than Bank of Botetourt. But when comparing it to its historical volatility, Western Asset Global is 2.87 times less risky than Bank of Botetourt. It trades about 0.04 of its potential returns per unit of risk. Bank of Botetourt is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,656 in Bank of Botetourt on September 4, 2024 and sell it today you would earn a total of 560.00 from holding Bank of Botetourt or generate 21.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.77% |
| Values | Daily Returns |
Western Asset Global vs. Bank of Botetourt
Performance |
| Timeline |
| Western Asset Global |
| Bank of Botetourt |
Western Asset and Bank of Botetourt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Bank of Botetourt
The main advantage of trading using opposite Western Asset and Bank of Botetourt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Bank of Botetourt 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 Bank of Botetourt will offset losses from the drop in Bank of Botetourt'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 |
| Bank of Botetourt vs. Western Asset Global | Bank of Botetourt vs. Invesco Trust For | Bank of Botetourt vs. Logan Ridge Finance | Bank of Botetourt vs. Invesco Advantage MIT |
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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