Correlation Between Western Asset and Taiwan Closed
Can any of the company-specific risk be diversified away by investing in both Western Asset and Taiwan Closed 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 Taiwan Closed 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 Taiwan Closed, you can compare the effects of market volatilities on Western Asset and Taiwan Closed 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 Taiwan Closed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Taiwan Closed.
Diversification Opportunities for Western Asset and Taiwan Closed
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Taiwan is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Taiwan Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Closed 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 Taiwan Closed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Closed has no effect on the direction of Western Asset i.e., Western Asset and Taiwan Closed go up and down completely randomly.
Pair Corralation between Western Asset and Taiwan Closed
Considering the 90-day investment horizon Western Asset is expected to generate 3.53 times less return on investment than Taiwan Closed. But when comparing it to its historical volatility, Western Asset High is 1.39 times less risky than Taiwan Closed. It trades about 0.04 of its potential returns per unit of risk. Taiwan Closed is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,602 in Taiwan Closed on August 27, 2024 and sell it today you would earn a total of 1,716 from holding Taiwan Closed or generate 65.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Taiwan Closed
Performance |
| Timeline |
| Western Asset High |
| Taiwan Closed |
Western Asset and Taiwan Closed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Taiwan Closed
The main advantage of trading using opposite Western Asset and Taiwan Closed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Taiwan Closed 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 Taiwan Closed will offset losses from the drop in Taiwan Closed's long position.| Western Asset vs. Pimco Dynamic Income | Western Asset vs. Pimco Corporate Income | Western Asset vs. Cornerstone Strategic Value | Western Asset vs. Cornerstone Strategic Return |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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