Correlation Between Western Asset and Brandes Separately
Can any of the company-specific risk be diversified away by investing in both Western Asset and Brandes Separately 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 Brandes Separately into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Smash and Brandes Separately Managed, you can compare the effects of market volatilities on Western Asset and Brandes Separately 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 Brandes Separately. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Brandes Separately.
Diversification Opportunities for Western Asset and Brandes Separately
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Brandes is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Smash and Brandes Separately Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Separately 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 Smash are associated (or correlated) with Brandes Separately. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Separately has no effect on the direction of Western Asset i.e., Western Asset and Brandes Separately go up and down completely randomly.
Pair Corralation between Western Asset and Brandes Separately
Assuming the 90 days horizon Western Asset Smash is expected to generate 2.39 times more return on investment than Brandes Separately. However, Western Asset is 2.39 times more volatile than Brandes Separately Managed. It trades about 0.1 of its potential returns per unit of risk. Brandes Separately Managed is currently generating about 0.08 per unit of risk. If you would invest 740.00 in Western Asset Smash on November 2, 2024 and sell it today you would earn a total of 9.00 from holding Western Asset Smash or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Western Asset Smash vs. Brandes Separately Managed
Performance |
| Timeline |
| Western Asset Smash |
| Brandes Separately |
Western Asset and Brandes Separately Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Brandes Separately
The main advantage of trading using opposite Western Asset and Brandes Separately positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Brandes Separately 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 Brandes Separately will offset losses from the drop in Brandes Separately's long position.| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
| Brandes Separately vs. Brandes Small Cap | Brandes Separately vs. Brandes Small Cap | Brandes Separately vs. Brandes Small Cap | Brandes Separately vs. Brandes E Plus |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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