Correlation Between Western Asset and Eic Value
Can any of the company-specific risk be diversified away by investing in both Western Asset and Eic Value 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 Eic Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Pennsylvania and Eic Value Fund, you can compare the effects of market volatilities on Western Asset and Eic Value 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 Eic Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Eic Value.
Diversification Opportunities for Western Asset and Eic Value
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Eic is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Pennsylvania and Eic Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eic Value Fund 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 Pennsylvania are associated (or correlated) with Eic Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eic Value Fund has no effect on the direction of Western Asset i.e., Western Asset and Eic Value go up and down completely randomly.
Pair Corralation between Western Asset and Eic Value
Assuming the 90 days horizon Western Asset is expected to generate 3.96 times less return on investment than Eic Value. But when comparing it to its historical volatility, Western Asset Pennsylvania is 2.25 times less risky than Eic Value. It trades about 0.11 of its potential returns per unit of risk. Eic Value Fund is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,870 in Eic Value Fund on August 28, 2024 and sell it today you would earn a total of 51.00 from holding Eic Value Fund or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Pennsylvania vs. Eic Value Fund
Performance |
| Timeline |
| Western Asset Pennsy |
| Eic Value Fund |
Western Asset and Eic Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Eic Value
The main advantage of trading using opposite Western Asset and Eic Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Eic Value 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 Eic Value will offset losses from the drop in Eic Value's long position.| Western Asset vs. Qs Large Cap | Western Asset vs. Qs Global Equity | Western Asset vs. Small Cap Stock | Western Asset vs. Eic Value Fund |
| Eic Value vs. Archer Balanced Fund | Eic Value vs. Balanced Fund Investor | Eic Value vs. Ab Value Fund | Eic Value vs. Volumetric Fund Volumetric |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |