Correlation Between Natural Alternatives and Western Asset
Can any of the company-specific risk be diversified away by investing in both Natural Alternatives 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 Natural Alternatives and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Alternatives International and Western Asset Investment, you can compare the effects of market volatilities on Natural Alternatives 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 Natural Alternatives with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Alternatives and Western Asset.
Diversification Opportunities for Natural Alternatives and Western Asset
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Natural and Western is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Natural Alternatives Internati and Western Asset Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Investment and Natural Alternatives 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 Natural Alternatives International 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 Investment has no effect on the direction of Natural Alternatives i.e., Natural Alternatives and Western Asset go up and down completely randomly.
Pair Corralation between Natural Alternatives and Western Asset
Given the investment horizon of 90 days Natural Alternatives International is expected to generate 5.59 times more return on investment than Western Asset. However, Natural Alternatives is 5.59 times more volatile than Western Asset Investment. It trades about 0.07 of its potential returns per unit of risk. Western Asset Investment is currently generating about -0.04 per unit of risk. If you would invest 454.00 in Natural Alternatives International on September 3, 2024 and sell it today you would earn a total of 15.00 from holding Natural Alternatives International or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Alternatives Internati vs. Western Asset Investment
Performance |
| Timeline |
| Natural Alternatives |
| Western Asset Investment |
Natural Alternatives and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Alternatives and Western Asset
The main advantage of trading using opposite Natural Alternatives and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Alternatives 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.| Natural Alternatives vs. FitLife Brands, Common | Natural Alternatives vs. Lifeway Foods | Natural Alternatives vs. Else Nutrition Holdings | Natural Alternatives vs. Central Garden Pet |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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