Correlation Between Performance Trust and Metropolitan West
Can any of the company-specific risk be diversified away by investing in both Performance Trust and Metropolitan West 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 Performance Trust and Metropolitan West into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Trust Strategic and Metropolitan West Total, you can compare the effects of market volatilities on Performance Trust and Metropolitan West 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 Performance Trust with a short position of Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Trust and Metropolitan West.
Diversification Opportunities for Performance Trust and Metropolitan West
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Performance and Metropolitan is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Performance Trust Strategic and Metropolitan West Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West Total and Performance Trust 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 Performance Trust Strategic are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West Total has no effect on the direction of Performance Trust i.e., Performance Trust and Metropolitan West go up and down completely randomly.
Pair Corralation between Performance Trust and Metropolitan West
Assuming the 90 days horizon Performance Trust Strategic is expected to generate 0.91 times more return on investment than Metropolitan West. However, Performance Trust Strategic is 1.1 times less risky than Metropolitan West. It trades about -0.05 of its potential returns per unit of risk. Metropolitan West Total is currently generating about -0.12 per unit of risk. If you would invest 2,024 in Performance Trust Strategic on September 12, 2024 and sell it today you would lose (21.00) from holding Performance Trust Strategic or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Trust Strategic vs. Metropolitan West Total
Performance |
| Timeline |
| Performance Trust |
| Metropolitan West Total |
Performance Trust and Metropolitan West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Trust and Metropolitan West
The main advantage of trading using opposite Performance Trust and Metropolitan West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Trust position performs unexpectedly, Metropolitan West 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 Metropolitan West will offset losses from the drop in Metropolitan West's long position.| Performance Trust vs. Alphacentric Income Opportunities | Performance Trust vs. Performance Trust Municipal | Performance Trust vs. Guggenheim Total Return | Performance Trust vs. Pimco Income Fund |
| Metropolitan West vs. Investec Emerging Markets | Metropolitan West vs. Mid Cap 15x Strategy | Metropolitan West vs. Doubleline Emerging Markets | Metropolitan West vs. Shelton Emerging Markets |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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