Correlation Between Small Pany and Western Asset
Can any of the company-specific risk be diversified away by investing in both Small Pany and Western Asset 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 Small Pany and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Western Asset E, you can compare the effects of market volatilities on Small Pany and Western Asset 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 Small Pany with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Pany and Western Asset.
Diversification Opportunities for Small Pany and Western Asset
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Small and Western is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E and Small Pany 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 Small Pany Growth are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of Small Pany i.e., Small Pany and Western Asset go up and down completely randomly.
Pair Corralation between Small Pany and Western Asset
Assuming the 90 days horizon Small Pany Growth is expected to under-perform the Western Asset. In addition to that, Small Pany is 11.03 times more volatile than Western Asset E. It trades about -0.12 of its total potential returns per unit of risk. Western Asset E is currently generating about -0.66 per unit of volatility. If you would invest 1,062 in Western Asset E on October 10, 2024 and sell it today you would lose (31.00) from holding Western Asset E or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Western Asset E
Performance |
| Timeline |
| Small Pany Growth |
| Western Asset E |
Small Pany and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Pany and Western Asset
The main advantage of trading using opposite Small Pany and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Pany position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Small Pany vs. Mid Cap Growth | Small Pany vs. Growth Portfolio Class | Small Pany vs. Morgan Stanley Multi | Small Pany vs. Emerging Markets Portfolio |
| Western Asset vs. Small Pany Growth | Western Asset vs. Champlain Small | Western Asset vs. Sp Smallcap 600 | Western Asset vs. Kinetics Small Cap |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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