Correlation Between Western Asset and Postal Realty
Can any of the company-specific risk be diversified away by investing in both Western Asset and Postal Realty 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 Postal Realty 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 Postal Realty Trust, you can compare the effects of market volatilities on Western Asset and Postal Realty 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 Postal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Postal Realty.
Diversification Opportunities for Western Asset and Postal Realty
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Postal is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Postal Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Realty Trust 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 Postal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Realty Trust has no effect on the direction of Western Asset i.e., Western Asset and Postal Realty go up and down completely randomly.
Pair Corralation between Western Asset and Postal Realty
Considering the 90-day investment horizon Western Asset Investment is expected to generate 0.41 times more return on investment than Postal Realty. However, Western Asset Investment is 2.45 times less risky than Postal Realty. It trades about -0.1 of its potential returns per unit of risk. Postal Realty Trust is currently generating about -0.12 per unit of risk. If you would invest 1,684 in Western Asset Investment on August 27, 2024 and sell it today you would lose (18.00) from holding Western Asset Investment or give up 1.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Investment vs. Postal Realty Trust
Performance |
| Timeline |
| Western Asset Investment |
| Postal Realty Trust |
Western Asset and Postal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Postal Realty
The main advantage of trading using opposite Western Asset and Postal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Postal Realty 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 Postal Realty will offset losses from the drop in Postal Realty's long position.| Western Asset vs. PowerUp Acquisition Corp | Western Asset vs. Aurora Innovation | Western Asset vs. HUMANA INC | Western Asset vs. Aquagold International |
| Postal Realty vs. Office Properties Income | Postal Realty vs. Boston Properties | Postal Realty vs. SL Green Realty | Postal Realty vs. Alexandria Real Estate |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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