Correlation Between Pace High and Western Asset
Can any of the company-specific risk be diversified away by investing in both Pace High 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 High 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 High Yield and Western Asset E, you can compare the effects of market volatilities on Pace High 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 High with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Western Asset.
Diversification Opportunities for Pace High and Western Asset
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pace and Western is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield 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 Pace High 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 High Yield 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 Pace High i.e., Pace High and Western Asset go up and down completely randomly.
Pair Corralation between Pace High and Western Asset
Assuming the 90 days horizon Pace High is expected to generate 1.47 times less return on investment than Western Asset. But when comparing it to its historical volatility, Pace High Yield is 3.29 times less risky than Western Asset. It trades about 0.26 of its potential returns per unit of risk. Western Asset E is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 920.00 in Western Asset E on August 31, 2024 and sell it today you would earn a total of 9.00 from holding Western Asset E or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Western Asset E
Performance |
| Timeline |
| Pace High Yield |
| Western Asset E |
Pace High and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Western Asset
The main advantage of trading using opposite Pace High and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High 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 High vs. Vanguard High Yield Corporate | Pace High vs. Vanguard High Yield Porate | Pace High vs. Blackrock Hi Yld | Pace High vs. Blackrock High Yield |
| Western Asset vs. Metropolitan West Total | Western Asset vs. Metropolitan West Total | Western Asset vs. Pimco Total Return | Western Asset vs. Total Return Fund |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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