Correlation Between Western Asset and Aberdeen Japan
Can any of the company-specific risk be diversified away by investing in both Western Asset and Aberdeen Japan 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 Aberdeen Japan 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 Aberdeen Japan Equity, you can compare the effects of market volatilities on Western Asset and Aberdeen Japan 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 Aberdeen Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Aberdeen Japan.
Diversification Opportunities for Western Asset and Aberdeen Japan
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Aberdeen is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Managed and Aberdeen Japan Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberdeen Japan Equity 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 Aberdeen Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberdeen Japan Equity has no effect on the direction of Western Asset i.e., Western Asset and Aberdeen Japan go up and down completely randomly.
Pair Corralation between Western Asset and Aberdeen Japan
Considering the 90-day investment horizon Western Asset Managed is expected to generate 0.61 times more return on investment than Aberdeen Japan. However, Western Asset Managed is 1.65 times less risky than Aberdeen Japan. It trades about 0.14 of its potential returns per unit of risk. Aberdeen Japan Equity is currently generating about 0.07 per unit of risk. If you would invest 1,027 in Western Asset Managed on August 28, 2024 and sell it today you would earn a total of 17.00 from holding Western Asset Managed or generate 1.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Managed vs. Aberdeen Japan Equity
Performance |
| Timeline |
| Western Asset Managed |
| Aberdeen Japan Equity |
Western Asset and Aberdeen Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Aberdeen Japan
The main advantage of trading using opposite Western Asset and Aberdeen Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Aberdeen Japan 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 Aberdeen Japan will offset losses from the drop in Aberdeen Japan's long position.| Western Asset vs. Western Asset Municipal | Western Asset vs. Blackrock Muniholdings Quality | Western Asset vs. DTF Tax Free | Western Asset vs. John Hancock Income |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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