Correlation Between Western Asset and Natural Alternatives
Can any of the company-specific risk be diversified away by investing in both Western Asset and Natural Alternatives 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 Natural Alternatives 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 Natural Alternatives International, you can compare the effects of market volatilities on Western Asset and Natural Alternatives 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 Natural Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Natural Alternatives.
Diversification Opportunities for Western Asset and Natural Alternatives
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and Natural is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Natural Alternatives Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Alternatives 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 Natural Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Alternatives has no effect on the direction of Western Asset i.e., Western Asset and Natural Alternatives go up and down completely randomly.
Pair Corralation between Western Asset and Natural Alternatives
Considering the 90-day investment horizon Western Asset Investment is expected to under-perform the Natural Alternatives. But the stock apears to be less risky and, when comparing its historical volatility, Western Asset Investment is 5.59 times less risky than Natural Alternatives. The stock trades about -0.04 of its potential returns per unit of risk. The Natural Alternatives International is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 454.00 in Natural Alternatives International on September 3, 2024 and sell it today you would earn a total of 15.00 from holding Natural Alternatives International or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. Natural Alternatives Internati
Performance |
| Timeline |
| Western Asset Investment |
| Natural Alternatives |
Western Asset and Natural Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Natural Alternatives
The main advantage of trading using opposite Western Asset and Natural Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Natural Alternatives 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 Natural Alternatives will offset losses from the drop in Natural Alternatives' 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 |
| Natural Alternatives vs. FitLife Brands, Common | Natural Alternatives vs. Lifeway Foods | Natural Alternatives vs. Else Nutrition Holdings | Natural Alternatives vs. Central Garden Pet |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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