Correlation Between Responsible Esg and Western Asset
Can any of the company-specific risk be diversified away by investing in both Responsible Esg 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 Responsible Esg and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Responsible Esg Equity and Western Asset Diversified, you can compare the effects of market volatilities on Responsible Esg 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 Responsible Esg with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Responsible Esg and Western Asset.
Diversification Opportunities for Responsible Esg and Western Asset
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Responsible and Western is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Responsible Esg Equity 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 Responsible Esg 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 Responsible Esg Equity 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 Responsible Esg i.e., Responsible Esg and Western Asset go up and down completely randomly.
Pair Corralation between Responsible Esg and Western Asset
Assuming the 90 days horizon Responsible Esg Equity is expected to generate 2.38 times more return on investment than Western Asset. However, Responsible Esg is 2.38 times more volatile than Western Asset Diversified. It trades about 0.11 of its potential returns per unit of risk. Western Asset Diversified is currently generating about 0.03 per unit of risk. If you would invest 1,515 in Responsible Esg Equity on September 2, 2024 and sell it today you would earn a total of 352.00 from holding Responsible Esg Equity or generate 23.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Responsible Esg Equity vs. Western Asset Diversified
Performance |
| Timeline |
| Responsible Esg Equity |
| Western Asset Diversified |
Responsible Esg and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Responsible Esg and Western Asset
The main advantage of trading using opposite Responsible Esg and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Responsible Esg 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.| Responsible Esg vs. Arrow Managed Futures | Responsible Esg vs. Aqr Managed Futures | Responsible Esg vs. Asg Managed Futures | Responsible Esg vs. Blackrock Inflation Protected |
| Western Asset vs. Morningstar Unconstrained Allocation | Western Asset vs. Old Westbury Large | Western Asset vs. T Rowe Price | Western Asset vs. Enhanced Large Pany |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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