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 High, 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
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gmo and Western is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Gmo High Yield and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High 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 High 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 Yield is expected to generate 1.07 times more return on investment than Western Asset. However, Gmo High is 1.07 times more volatile than Western Asset High. It trades about 0.21 of its potential returns per unit of risk. Western Asset High is currently generating about 0.19 per unit of risk. If you would invest 1,767 in Gmo High Yield on September 2, 2024 and sell it today you would earn a total of 41.00 from holding Gmo High Yield or generate 2.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gmo High Yield vs. Western Asset High
Performance |
| Timeline |
| Gmo High Yield |
| Western Asset High |
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. Columbia Vertible Securities | Gmo High vs. Absolute Convertible Arbitrage | Gmo High vs. Virtus Convertible | Gmo High vs. Fidelity Sai Convertible |
| Western Asset vs. Transamerica Emerging Markets | Western Asset vs. Pnc Emerging Markets | Western Asset vs. Locorr Market Trend | Western Asset vs. Aqr Sustainable Long Short |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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