Correlation Between Western Asset and Farmers
Can any of the company-specific risk be diversified away by investing in both Western Asset and Farmers 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 Farmers 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 Farmers And Merchants, you can compare the effects of market volatilities on Western Asset and Farmers 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 Farmers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Farmers.
Diversification Opportunities for Western Asset and Farmers
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Farmers is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Farmers And Merchants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmers And Merchants 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 Farmers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmers And Merchants has no effect on the direction of Western Asset i.e., Western Asset and Farmers go up and down completely randomly.
Pair Corralation between Western Asset and Farmers
Considering the 90-day investment horizon Western Asset Global is expected to generate 0.41 times more return on investment than Farmers. However, Western Asset Global is 2.44 times less risky than Farmers. It trades about 0.05 of its potential returns per unit of risk. Farmers And Merchants is currently generating about -0.02 per unit of risk. If you would invest 1,019 in Western Asset Global on September 12, 2024 and sell it today you would earn a total of 155.50 from holding Western Asset Global or generate 15.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.79% |
| Values | Daily Returns |
Western Asset Global vs. Farmers And Merchants
Performance |
| Timeline |
| Western Asset Global |
| Farmers And Merchants |
Western Asset and Farmers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Farmers
The main advantage of trading using opposite Western Asset and Farmers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Farmers 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 Farmers will offset losses from the drop in Farmers' 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 |
| Farmers vs. First National Bank | Farmers vs. Farmers Merchants Bancorp | Farmers vs. Exchange Bank | Farmers vs. First National of |
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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