Correlation Between Fm Investments and Western Asset
Can any of the company-specific risk be diversified away by investing in both Fm Investments 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 Fm Investments and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fm Investments Large and Western Asset Mortgage, you can compare the effects of market volatilities on Fm Investments 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 Fm Investments with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fm Investments and Western Asset.
Diversification Opportunities for Fm Investments and Western Asset
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IAFLX and Western is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Fm Investments Large and Western Asset Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Mortgage and Fm Investments 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 Fm Investments Large 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 Mortgage has no effect on the direction of Fm Investments i.e., Fm Investments and Western Asset go up and down completely randomly.
Pair Corralation between Fm Investments and Western Asset
Assuming the 90 days horizon Fm Investments Large is expected to generate 3.07 times more return on investment than Western Asset. However, Fm Investments is 3.07 times more volatile than Western Asset Mortgage. It trades about 0.11 of its potential returns per unit of risk. Western Asset Mortgage is currently generating about 0.05 per unit of risk. If you would invest 1,477 in Fm Investments Large on September 14, 2024 and sell it today you would earn a total of 507.00 from holding Fm Investments Large or generate 34.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fm Investments Large vs. Western Asset Mortgage
Performance |
| Timeline |
| Fm Investments Large |
| Western Asset Mortgage |
Fm Investments and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fm Investments and Western Asset
The main advantage of trading using opposite Fm Investments and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fm Investments 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.The idea behind Fm Investments Large and Western Asset Mortgage pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |