Correlation Between Select Us and Western Asset
Can any of the company-specific risk be diversified away by investing in both Select Us 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 Select Us and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Select Equity Fund and Western Asset High, you can compare the effects of market volatilities on Select Us 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 Select Us with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Us and Western Asset.
Diversification Opportunities for Select Us and Western Asset
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Select and Western is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Select Equity Fund and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High and Select Us 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 Select Equity Fund 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 High has no effect on the direction of Select Us i.e., Select Us and Western Asset go up and down completely randomly.
Pair Corralation between Select Us and Western Asset
Assuming the 90 days horizon Select Equity Fund is expected to generate 2.69 times more return on investment than Western Asset. However, Select Us is 2.69 times more volatile than Western Asset High. It trades about 0.13 of its potential returns per unit of risk. Western Asset High is currently generating about 0.15 per unit of risk. If you would invest 1,402 in Select Equity Fund on August 29, 2024 and sell it today you would earn a total of 662.00 from holding Select Equity Fund or generate 47.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Select Equity Fund vs. Western Asset High
Performance |
| Timeline |
| Select Equity |
| Western Asset High |
Select Us and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Us and Western Asset
The main advantage of trading using opposite Select Us and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Us 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.| Select Us vs. International Developed Markets | Select Us vs. Global Real Estate | Select Us vs. Global Real Estate | Select Us vs. Global Real Estate |
| Western Asset vs. Clearbridge Aggressive Growth | Western Asset vs. Clearbridge Small Cap | Western Asset vs. Qs International Equity | Western Asset vs. Clearbridge Appreciation Fund |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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