Correlation Between Western Asset and Invesco Gold
Can any of the company-specific risk be diversified away by investing in both Western Asset and Invesco Gold 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 Invesco Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset E and Invesco Gold Special, you can compare the effects of market volatilities on Western Asset and Invesco Gold 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 Invesco Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Invesco Gold.
Diversification Opportunities for Western Asset and Invesco Gold
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Invesco is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset E and Invesco Gold Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Gold Special 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 E are associated (or correlated) with Invesco Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Gold Special has no effect on the direction of Western Asset i.e., Western Asset and Invesco Gold go up and down completely randomly.
Pair Corralation between Western Asset and Invesco Gold
Assuming the 90 days horizon Western Asset is expected to generate 10.17 times less return on investment than Invesco Gold. But when comparing it to its historical volatility, Western Asset E is 3.66 times less risky than Invesco Gold. It trades about 0.01 of its potential returns per unit of risk. Invesco Gold Special is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,189 in Invesco Gold Special on September 4, 2024 and sell it today you would earn a total of 637.00 from holding Invesco Gold Special or generate 29.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Western Asset E vs. Invesco Gold Special
Performance |
| Timeline |
| Western Asset E |
| Invesco Gold Special |
Western Asset and Invesco Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Invesco Gold
The main advantage of trading using opposite Western Asset and Invesco Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Invesco Gold 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 Invesco Gold will offset losses from the drop in Invesco Gold'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 |
| Invesco Gold vs. Massmutual Select Diversified | Invesco Gold vs. Ep Emerging Markets | Invesco Gold vs. Fundvantage Trust | Invesco Gold vs. Legg Mason Partners |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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