Correlation Between Western Asset and STRATSSM Certificates
Can any of the company-specific risk be diversified away by investing in both Western Asset and STRATSSM Certificates 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 STRATSSM Certificates 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 STRATSSM Certificates series, you can compare the effects of market volatilities on Western Asset and STRATSSM Certificates 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 STRATSSM Certificates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and STRATSSM Certificates.
Diversification Opportunities for Western Asset and STRATSSM Certificates
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and STRATSSM is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and STRATSSM Certificates series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATSSM Certificates 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 STRATSSM Certificates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATSSM Certificates has no effect on the direction of Western Asset i.e., Western Asset and STRATSSM Certificates go up and down completely randomly.
Pair Corralation between Western Asset and STRATSSM Certificates
Considering the 90-day investment horizon Western Asset is expected to generate 2.0 times less return on investment than STRATSSM Certificates. But when comparing it to its historical volatility, Western Asset Global is 1.59 times less risky than STRATSSM Certificates. It trades about 0.04 of its potential returns per unit of risk. STRATSSM Certificates series is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,007 in STRATSSM Certificates series on September 12, 2024 and sell it today you would earn a total of 292.00 from holding STRATSSM Certificates series or generate 14.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Western Asset Global vs. STRATSSM Certificates series
Performance |
| Timeline |
| Western Asset Global |
| STRATSSM Certificates |
Western Asset and STRATSSM Certificates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and STRATSSM Certificates
The main advantage of trading using opposite Western Asset and STRATSSM Certificates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, STRATSSM Certificates 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 STRATSSM Certificates will offset losses from the drop in STRATSSM Certificates' 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 |
| STRATSSM Certificates vs. Freedom Bank of | STRATSSM Certificates vs. HUMANA INC | STRATSSM Certificates vs. Barloworld Ltd ADR | STRATSSM Certificates vs. Morningstar Unconstrained Allocation |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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