Correlation Between Mid-cap 15x and Western Assets
Can any of the company-specific risk be diversified away by investing in both Mid-cap 15x and Western Assets 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 Mid-cap 15x and Western Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mid Cap 15x Strategy and Western Assets Emerging, you can compare the effects of market volatilities on Mid-cap 15x and Western Assets 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 Mid-cap 15x with a short position of Western Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap 15x and Western Assets.
Diversification Opportunities for Mid-cap 15x and Western Assets
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mid-cap and Western is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Western Assets Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Assets Emerging and Mid-cap 15x 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 Mid Cap 15x Strategy are associated (or correlated) with Western Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Assets Emerging has no effect on the direction of Mid-cap 15x i.e., Mid-cap 15x and Western Assets go up and down completely randomly.
Pair Corralation between Mid-cap 15x and Western Assets
Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 4.26 times more return on investment than Western Assets. However, Mid-cap 15x is 4.26 times more volatile than Western Assets Emerging. It trades about 0.06 of its potential returns per unit of risk. Western Assets Emerging is currently generating about 0.1 per unit of risk. If you would invest 11,229 in Mid Cap 15x Strategy on November 3, 2024 and sell it today you would earn a total of 2,632 from holding Mid Cap 15x Strategy or generate 23.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mid Cap 15x Strategy vs. Western Assets Emerging
Performance |
| Timeline |
| Mid Cap 15x |
| Western Assets Emerging |
Mid-cap 15x and Western Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mid-cap 15x and Western Assets
The main advantage of trading using opposite Mid-cap 15x and Western Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap 15x position performs unexpectedly, Western Assets 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 Assets will offset losses from the drop in Western Assets' long position.| Mid-cap 15x vs. Eagle Mlp Strategy | Mid-cap 15x vs. Franklin Emerging Market | Mid-cap 15x vs. Angel Oak Multi Strategy | Mid-cap 15x vs. Vy Jpmorgan Emerging |
| Western Assets vs. Schwab Small Cap Index | Western Assets vs. Tax Managed Mid Small | Western Assets vs. Lord Abbett Diversified | Western Assets vs. Lord Abbett Diversified |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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