Correlation Between Western Asset and United Overseas
Can any of the company-specific risk be diversified away by investing in both Western Asset and United Overseas 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 United Overseas 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 United Overseas Bank, you can compare the effects of market volatilities on Western Asset and United Overseas 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 United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and United Overseas.
Diversification Opportunities for Western Asset and United Overseas
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and United is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas 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 United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of Western Asset i.e., Western Asset and United Overseas go up and down completely randomly.
Pair Corralation between Western Asset and United Overseas
Considering the 90-day investment horizon Western Asset Global is expected to under-perform the United Overseas. But the etf apears to be less risky and, when comparing its historical volatility, Western Asset Global is 2.7 times less risky than United Overseas. The etf trades about 0.0 of its potential returns per unit of risk. The United Overseas Bank is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,419 in United Overseas Bank on September 3, 2024 and sell it today you would earn a total of 1,026 from holding United Overseas Bank or generate 23.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Global vs. United Overseas Bank
Performance |
| Timeline |
| Western Asset Global |
| United Overseas Bank |
Western Asset and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and United Overseas
The main advantage of trading using opposite Western Asset and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, United Overseas 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 United Overseas will offset losses from the drop in United Overseas' 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 |
| United Overseas vs. Western Asset Global | United Overseas vs. Invesco Trust For | United Overseas vs. Logan Ridge Finance | United Overseas 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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