Correlation Between Western Asset and First National
Can any of the company-specific risk be diversified away by investing in both Western Asset and First National 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 First National 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 First National of, you can compare the effects of market volatilities on Western Asset and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and First National.
Diversification Opportunities for Western Asset and First National
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and First is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and First National of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National has no effect on the direction of Western Asset i.e., Western Asset and First National go up and down completely randomly.
Pair Corralation between Western Asset and First National
Considering the 90-day investment horizon Western Asset Global is expected to under-perform the First National. But the etf apears to be less risky and, when comparing its historical volatility, Western Asset Global is 2.41 times less risky than First National. The etf trades about -0.15 of its potential returns per unit of risk. The First National of is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,240,000 in First National of on September 5, 2024 and sell it today you would lose (30,000) from holding First National of or give up 2.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Global vs. First National of
Performance |
| Timeline |
| Western Asset Global |
| First National |
Western Asset and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and First National
The main advantage of trading using opposite Western Asset and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, First National 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 First National will offset losses from the drop in First National'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 |
| First National vs. Western Asset Global | First National vs. Invesco Trust For | First National vs. Logan Ridge Finance | First National 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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