Correlation Between Gmo High and Western Asset
Can any of the company-specific risk be diversified away by investing in both Gmo High and Western Asset 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 Gmo High and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gmo High Yield and Western Asset Total, you can compare the effects of market volatilities on Gmo High and Western Asset 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 Gmo High with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gmo High and Western Asset.
Diversification Opportunities for Gmo High and Western Asset
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Gmo and Western is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Western Asset Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Total and Gmo High 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 Gmo High Yield are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Total has no effect on the direction of Gmo High i.e., Gmo High and Western Asset go up and down completely randomly.
Pair Corralation between Gmo High and Western Asset
Assuming the 90 days horizon Gmo High is expected to generate 1.32 times less return on investment than Western Asset. In addition to that, Gmo High is 1.07 times more volatile than Western Asset Total. It trades about 0.35 of its total potential returns per unit of risk. Western Asset Total is currently generating about 0.49 per unit of volatility. If you would invest 906.00 in Western Asset Total on September 13, 2024 and sell it today you would earn a total of 12.00 from holding Western Asset Total or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Western Asset Total
Performance |
| Timeline |
| Gmo High Yield |
| Western Asset Total |
Gmo High and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gmo High and Western Asset
The main advantage of trading using opposite Gmo High and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gmo High position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Gmo High vs. General Money Market | Gmo High vs. Edward Jones Money | Gmo High vs. The Gabelli Money | Gmo High vs. Prudential Government Money |
| Western Asset vs. Franklin Mutual Beacon | Western Asset vs. Templeton Developing Markets | Western Asset vs. Franklin Mutual Global | Western Asset vs. Franklin Mutual Global |
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 Directory module to find actively traded commodities issued by global exchanges.
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