Correlation Between Quantified Market and Western Asset
Can any of the company-specific risk be diversified away by investing in both Quantified Market 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 Quantified Market and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quantified Market Leaders and Western Asset Diversified, you can compare the effects of market volatilities on Quantified Market 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 Quantified Market with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quantified Market and Western Asset.
Diversification Opportunities for Quantified Market and Western Asset
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Quantified and Western is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Quantified Market Leaders and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified and Quantified Market 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 Quantified Market Leaders 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 Diversified has no effect on the direction of Quantified Market i.e., Quantified Market and Western Asset go up and down completely randomly.
Pair Corralation between Quantified Market and Western Asset
Assuming the 90 days horizon Quantified Market Leaders is expected to generate 3.31 times more return on investment than Western Asset. However, Quantified Market is 3.31 times more volatile than Western Asset Diversified. It trades about 0.06 of its potential returns per unit of risk. Western Asset Diversified is currently generating about 0.02 per unit of risk. If you would invest 931.00 in Quantified Market Leaders on August 31, 2024 and sell it today you would earn a total of 272.00 from holding Quantified Market Leaders or generate 29.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quantified Market Leaders vs. Western Asset Diversified
Performance |
| Timeline |
| Quantified Market Leaders |
| Western Asset Diversified |
Quantified Market and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quantified Market and Western Asset
The main advantage of trading using opposite Quantified Market and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quantified Market 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.| Quantified Market vs. Growth Strategy Fund | Quantified Market vs. Pace International Emerging | Quantified Market vs. Black Oak Emerging | Quantified Market vs. Artisan Emerging Markets |
| Western Asset vs. Davis Financial Fund | Western Asset vs. Prudential Jennison Financial | Western Asset vs. Mesirow Financial Small | Western Asset vs. Fidelity Advisor Financial |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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