Correlation Between Western Asset and ECD Automotive
Can any of the company-specific risk be diversified away by investing in both Western Asset and ECD Automotive 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 ECD Automotive 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 ECD Automotive Design, you can compare the effects of market volatilities on Western Asset and ECD Automotive 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 ECD Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and ECD Automotive.
Diversification Opportunities for Western Asset and ECD Automotive
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and ECD is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and ECD Automotive Design in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECD Automotive Design 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 ECD Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECD Automotive Design has no effect on the direction of Western Asset i.e., Western Asset and ECD Automotive go up and down completely randomly.
Pair Corralation between Western Asset and ECD Automotive
Considering the 90-day investment horizon Western Asset Investment is expected to generate 0.14 times more return on investment than ECD Automotive. However, Western Asset Investment is 6.97 times less risky than ECD Automotive. It trades about 0.03 of its potential returns per unit of risk. ECD Automotive Design is currently generating about -0.04 per unit of risk. If you would invest 1,484 in Western Asset Investment on September 19, 2024 and sell it today you would earn a total of 198.00 from holding Western Asset Investment or generate 13.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. ECD Automotive Design
Performance |
| Timeline |
| Western Asset Investment |
| ECD Automotive Design |
Western Asset and ECD Automotive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and ECD Automotive
The main advantage of trading using opposite Western Asset and ECD Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, ECD Automotive 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 ECD Automotive will offset losses from the drop in ECD Automotive's long position.| Western Asset vs. Pioneer Floating Rate | Western Asset vs. The Gabelli Equity | Western Asset vs. Pioneer Municipal High | Western Asset vs. Nuveen Global High |
| ECD Automotive vs. Artisan Partners Asset | ECD Automotive vs. MGIC Investment Corp | ECD Automotive vs. Western Asset Investment | ECD Automotive vs. Independence Realty Trust |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |