Correlation Between Pace Smallmedium and Western Asset
Can any of the company-specific risk be diversified away by investing in both Pace Smallmedium 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 Pace Smallmedium and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace Smallmedium Value and Western Asset Municipal, you can compare the effects of market volatilities on Pace Smallmedium 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 Pace Smallmedium with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace Smallmedium and Western Asset.
Diversification Opportunities for Pace Smallmedium and Western Asset
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pace and Western is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Pace Smallmedium Value and Western Asset Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Municipal and Pace Smallmedium 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 Pace Smallmedium Value 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 Municipal has no effect on the direction of Pace Smallmedium i.e., Pace Smallmedium and Western Asset go up and down completely randomly.
Pair Corralation between Pace Smallmedium and Western Asset
Assuming the 90 days horizon Pace Smallmedium Value is expected to generate 4.25 times more return on investment than Western Asset. However, Pace Smallmedium is 4.25 times more volatile than Western Asset Municipal. It trades about 0.08 of its potential returns per unit of risk. Western Asset Municipal is currently generating about 0.14 per unit of risk. If you would invest 1,747 in Pace Smallmedium Value on September 14, 2024 and sell it today you would earn a total of 392.00 from holding Pace Smallmedium Value or generate 22.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Pace Smallmedium Value vs. Western Asset Municipal
Performance |
| Timeline |
| Pace Smallmedium Value |
| Western Asset Municipal |
Pace Smallmedium and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace Smallmedium and Western Asset
The main advantage of trading using opposite Pace Smallmedium and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace Smallmedium 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.| Pace Smallmedium vs. Wilmington Trust Retirement | Pace Smallmedium vs. Qs Moderate Growth | Pace Smallmedium vs. Jpmorgan Smartretirement 2035 | Pace Smallmedium vs. Jp Morgan Smartretirement |
| Western Asset vs. Queens Road Small | Western Asset vs. Fpa Queens Road | Western Asset vs. Fidelity Small Cap | Western Asset vs. Pace Smallmedium Value |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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