Correlation Between Us Strategic and Western Asset
Can any of the company-specific risk be diversified away by investing in both Us Strategic 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 Us Strategic and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Us Strategic Equity and Western Asset Diversified, you can compare the effects of market volatilities on Us Strategic 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 Us Strategic with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Strategic and Western Asset.
Diversification Opportunities for Us Strategic and Western Asset
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between RUSTX and Western is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Us Strategic 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 Us Strategic 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 Us Strategic 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 Us Strategic i.e., Us Strategic and Western Asset go up and down completely randomly.
Pair Corralation between Us Strategic and Western Asset
Assuming the 90 days horizon Us Strategic Equity is expected to generate 2.1 times more return on investment than Western Asset. However, Us Strategic is 2.1 times more volatile than Western Asset Diversified. It trades about 0.13 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 1,323 in Us Strategic Equity on August 27, 2024 and sell it today you would earn a total of 549.00 from holding Us Strategic Equity or generate 41.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Us Strategic Equity vs. Western Asset Diversified
Performance |
| Timeline |
| Us Strategic Equity |
| Western Asset Diversified |
Us Strategic and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Us Strategic and Western Asset
The main advantage of trading using opposite Us Strategic and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Strategic 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.| Us Strategic vs. Rationalpier 88 Convertible | Us Strategic vs. Absolute Convertible Arbitrage | Us Strategic vs. Calamos Dynamic Convertible | Us Strategic vs. Columbia Vertible Securities |
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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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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