Correlation Between Rational Special and Western Asset
Can any of the company-specific risk be diversified away by investing in both Rational Special 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 Rational Special and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rational Special Situations and Western Asset Pennsylvania, you can compare the effects of market volatilities on Rational Special 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 Rational Special with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rational Special and Western Asset.
Diversification Opportunities for Rational Special and Western Asset
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rational and Western is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Rational Special Situations and Western Asset Pennsylvania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Pennsy and Rational Special 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 Rational Special Situations 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 Pennsy has no effect on the direction of Rational Special i.e., Rational Special and Western Asset go up and down completely randomly.
Pair Corralation between Rational Special and Western Asset
Assuming the 90 days horizon Rational Special Situations is expected to generate 0.41 times more return on investment than Western Asset. However, Rational Special Situations is 2.41 times less risky than Western Asset. It trades about 0.27 of its potential returns per unit of risk. Western Asset Pennsylvania is currently generating about 0.07 per unit of risk. If you would invest 1,657 in Rational Special Situations on August 28, 2024 and sell it today you would earn a total of 170.00 from holding Rational Special Situations or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Rational Special Situations vs. Western Asset Pennsylvania
Performance |
| Timeline |
| Rational Special Sit |
| Western Asset Pennsy |
Rational Special and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rational Special and Western Asset
The main advantage of trading using opposite Rational Special and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Special 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.| Rational Special vs. Morgan Stanley Institutional | Rational Special vs. Rbc Funds Trust | Rational Special vs. Balanced Fund Investor | Rational Special vs. Small Cap Stock |
| Western Asset vs. Rbc Emerging Markets | Western Asset vs. Doubleline Emerging Markets | Western Asset vs. Legg Mason Partners | Western Asset vs. Artisan 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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