Correlation Between Western Asset and Helios Fairfax
Can any of the company-specific risk be diversified away by investing in both Western Asset and Helios Fairfax 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 Helios Fairfax 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 Helios Fairfax Partners, you can compare the effects of market volatilities on Western Asset and Helios Fairfax 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 Helios Fairfax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Helios Fairfax.
Diversification Opportunities for Western Asset and Helios Fairfax
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Western and Helios is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Helios Fairfax Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Fairfax Partners 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 Helios Fairfax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Fairfax Partners has no effect on the direction of Western Asset i.e., Western Asset and Helios Fairfax go up and down completely randomly.
Pair Corralation between Western Asset and Helios Fairfax
Considering the 90-day investment horizon Western Asset is expected to generate 1.2 times less return on investment than Helios Fairfax. But when comparing it to its historical volatility, Western Asset High is 4.92 times less risky than Helios Fairfax. It trades about 0.05 of its potential returns per unit of risk. Helios Fairfax Partners is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 289.00 in Helios Fairfax Partners on September 5, 2024 and sell it today you would lose (17.00) from holding Helios Fairfax Partners or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Helios Fairfax Partners
Performance |
| Timeline |
| Western Asset High |
| Helios Fairfax Partners |
Western Asset and Helios Fairfax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Helios Fairfax
The main advantage of trading using opposite Western Asset and Helios Fairfax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Helios Fairfax 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 Helios Fairfax will offset losses from the drop in Helios Fairfax's long position.| Western Asset vs. Advent Claymore Convertible | Western Asset vs. Blackstone Gso Strategic | Western Asset vs. Western Asset Investment | Western Asset vs. Pioneer Floating Rate |
| Helios Fairfax vs. Western Asset High | Helios Fairfax vs. SWK Holdings Corp | Helios Fairfax vs. Onex Corp | Helios Fairfax vs. P10 Inc |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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