Correlation Between Western Asset and Cornerstone Strategic
Can any of the company-specific risk be diversified away by investing in both Western Asset and Cornerstone Strategic 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 Cornerstone Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Cornerstone Strategic Value, you can compare the effects of market volatilities on Western Asset and Cornerstone Strategic 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 Cornerstone Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Cornerstone Strategic.
Diversification Opportunities for Western Asset and Cornerstone Strategic
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Cornerstone is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Cornerstone Strategic Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cornerstone Strategic 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 High are associated (or correlated) with Cornerstone Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cornerstone Strategic has no effect on the direction of Western Asset i.e., Western Asset and Cornerstone Strategic go up and down completely randomly.
Pair Corralation between Western Asset and Cornerstone Strategic
Considering the 90-day investment horizon Western Asset High is expected to generate 0.36 times more return on investment than Cornerstone Strategic. However, Western Asset High is 2.74 times less risky than Cornerstone Strategic. It trades about 0.17 of its potential returns per unit of risk. Cornerstone Strategic Value is currently generating about -0.04 per unit of risk. If you would invest 436.00 in Western Asset High on September 13, 2024 and sell it today you would earn a total of 12.00 from holding Western Asset High or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Cornerstone Strategic Value
Performance |
| Timeline |
| Western Asset High |
| Cornerstone Strategic |
Western Asset and Cornerstone Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Cornerstone Strategic
The main advantage of trading using opposite Western Asset and Cornerstone Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Cornerstone Strategic 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 Cornerstone Strategic will offset losses from the drop in Cornerstone Strategic's long position.| Western Asset vs. Western Asset High | Western Asset vs. Blackrock Debt Strategies | Western Asset vs. Western Asset Diversified | Western Asset vs. Western Asset 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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