Correlation Between Western Asset and Eagle Financial
Can any of the company-specific risk be diversified away by investing in both Western Asset and Eagle Financial 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 Eagle Financial 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 Eagle Financial Services, you can compare the effects of market volatilities on Western Asset and Eagle Financial 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 Eagle Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Eagle Financial.
Diversification Opportunities for Western Asset and Eagle Financial
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Eagle is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Eagle Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Financial Services 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 Eagle Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Financial Services has no effect on the direction of Western Asset i.e., Western Asset and Eagle Financial go up and down completely randomly.
Pair Corralation between Western Asset and Eagle Financial
Considering the 90-day investment horizon Western Asset Global is expected to under-perform the Eagle Financial. But the etf apears to be less risky and, when comparing its historical volatility, Western Asset Global is 2.07 times less risky than Eagle Financial. The etf trades about -0.02 of its potential returns per unit of risk. The Eagle Financial Services is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 3,243 in Eagle Financial Services on September 4, 2024 and sell it today you would earn a total of 307.00 from holding Eagle Financial Services or generate 9.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Western Asset Global vs. Eagle Financial Services
Performance |
| Timeline |
| Western Asset Global |
| Eagle Financial Services |
Western Asset and Eagle Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Eagle Financial
The main advantage of trading using opposite Western Asset and Eagle Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Eagle Financial 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 Eagle Financial will offset losses from the drop in Eagle Financial'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 |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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