Correlation Between Western Asset and New Germany
Can any of the company-specific risk be diversified away by investing in both Western Asset and New Germany 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 New Germany into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Managed and New Germany Closed, you can compare the effects of market volatilities on Western Asset and New Germany 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 New Germany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and New Germany.
Diversification Opportunities for Western Asset and New Germany
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and New is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and New Germany Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Germany Closed 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 Managed are associated (or correlated) with New Germany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Germany Closed has no effect on the direction of Western Asset i.e., Western Asset and New Germany go up and down completely randomly.
Pair Corralation between Western Asset and New Germany
Considering the 90-day investment horizon Western Asset Managed is expected to generate 0.66 times more return on investment than New Germany. However, Western Asset Managed is 1.52 times less risky than New Germany. It trades about 0.04 of its potential returns per unit of risk. New Germany Closed is currently generating about 0.0 per unit of risk. If you would invest 934.00 in Western Asset Managed on August 24, 2024 and sell it today you would earn a total of 110.00 from holding Western Asset Managed or generate 11.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Managed vs. New Germany Closed
Performance |
| Timeline |
| Western Asset Managed |
| New Germany Closed |
Western Asset and New Germany Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and New Germany
The main advantage of trading using opposite Western Asset and New Germany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, New Germany 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 New Germany will offset losses from the drop in New Germany's long position.| Western Asset vs. MFS Investment Grade | Western Asset vs. Eaton Vance National | Western Asset vs. Blackrock Muniyield Quality | Western Asset vs. Munivest Fund |
| New Germany vs. Eagle Point Income | New Germany vs. Western Asset High | New Germany vs. Nuveen New York | New Germany vs. Western Asset High |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |