Correlation Between Western Asset and Compania Cervecerias
Can any of the company-specific risk be diversified away by investing in both Western Asset and Compania Cervecerias 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 Compania Cervecerias into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Investment and Compania Cervecerias Unidas, you can compare the effects of market volatilities on Western Asset and Compania Cervecerias 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 Compania Cervecerias. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Compania Cervecerias.
Diversification Opportunities for Western Asset and Compania Cervecerias
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Compania is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Compania Cervecerias Unidas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compania Cervecerias 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 Investment are associated (or correlated) with Compania Cervecerias. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compania Cervecerias has no effect on the direction of Western Asset i.e., Western Asset and Compania Cervecerias go up and down completely randomly.
Pair Corralation between Western Asset and Compania Cervecerias
Considering the 90-day investment horizon Western Asset Investment is expected to generate 0.37 times more return on investment than Compania Cervecerias. However, Western Asset Investment is 2.7 times less risky than Compania Cervecerias. It trades about 0.05 of its potential returns per unit of risk. Compania Cervecerias Unidas is currently generating about -0.04 per unit of risk. If you would invest 1,515 in Western Asset Investment on September 1, 2024 and sell it today you would earn a total of 160.00 from holding Western Asset Investment or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. Compania Cervecerias Unidas
Performance |
| Timeline |
| Western Asset Investment |
| Compania Cervecerias |
Western Asset and Compania Cervecerias Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Compania Cervecerias
The main advantage of trading using opposite Western Asset and Compania Cervecerias positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Compania Cervecerias 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 Compania Cervecerias will offset losses from the drop in Compania Cervecerias' long position.| Western Asset vs. Visa Class A | Western Asset vs. Diamond Hill Investment | Western Asset vs. Distoken Acquisition | Western Asset vs. Associated Capital Group |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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