Correlation Between Western Asset and Freedom Bank
Can any of the company-specific risk be diversified away by investing in both Western Asset and Freedom Bank 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 Freedom Bank 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 Freedom Bank of, you can compare the effects of market volatilities on Western Asset and Freedom Bank 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 Freedom Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Freedom Bank.
Diversification Opportunities for Western Asset and Freedom Bank
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Freedom is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Freedom Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Bank 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 Freedom Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Bank has no effect on the direction of Western Asset i.e., Western Asset and Freedom Bank go up and down completely randomly.
Pair Corralation between Western Asset and Freedom Bank
Considering the 90-day investment horizon Western Asset Global is expected to generate 0.55 times more return on investment than Freedom Bank. However, Western Asset Global is 1.83 times less risky than Freedom Bank. It trades about 0.04 of its potential returns per unit of risk. Freedom Bank of is currently generating about -0.06 per unit of risk. If you would invest 1,049 in Western Asset Global on September 3, 2024 and sell it today you would earn a total of 118.00 from holding Western Asset Global or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 82.02% |
| Values | Daily Returns |
Western Asset Global vs. Freedom Bank of
Performance |
| Timeline |
| Western Asset Global |
| Freedom Bank |
Western Asset and Freedom Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Freedom Bank
The main advantage of trading using opposite Western Asset and Freedom Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Freedom Bank 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 Freedom Bank will offset losses from the drop in Freedom Bank'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 |
| Freedom Bank vs. Western Asset Global | Freedom Bank vs. Invesco Trust For | Freedom Bank vs. Logan Ridge Finance | Freedom Bank 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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