Correlation Between The Gold and Western Asset
Can any of the company-specific risk be diversified away by investing in both The Gold 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 The Gold and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gold Bullion and Western Asset E, you can compare the effects of market volatilities on The Gold 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 The Gold with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of The Gold and Western Asset.
Diversification Opportunities for The Gold and Western Asset
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between The and Western is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding The Gold Bullion 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 The Gold 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 The Gold Bullion 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 The Gold i.e., The Gold and Western Asset go up and down completely randomly.
Pair Corralation between The Gold and Western Asset
Assuming the 90 days horizon The Gold Bullion is expected to under-perform the Western Asset. In addition to that, The Gold is 3.45 times more volatile than Western Asset E. It trades about -0.17 of its total potential returns per unit of risk. Western Asset E is currently generating about 0.08 per unit of volatility. If you would invest 920.00 in Western Asset E on August 30, 2024 and sell it today you would earn a total of 6.00 from holding Western Asset E or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Gold Bullion vs. Western Asset E
Performance |
| Timeline |
| Gold Bullion |
| Western Asset E |
The Gold and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The Gold and Western Asset
The main advantage of trading using opposite The Gold and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The Gold 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.| The Gold vs. Aquagold International | The Gold vs. Morningstar Unconstrained Allocation | The Gold vs. Thrivent High Yield | The Gold vs. Via Renewables |
| Western Asset vs. Sprott Gold Equity | Western Asset vs. Vy Goldman Sachs | Western Asset vs. International Investors Gold | Western Asset vs. The Gold Bullion |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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