Correlation Between Royce Opportunity and Western Asset
Can any of the company-specific risk be diversified away by investing in both Royce Opportunity 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 Royce Opportunity and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royce Opportunity Fund and Western Asset Intermediate, you can compare the effects of market volatilities on Royce Opportunity 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 Royce Opportunity with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royce Opportunity and Western Asset.
Diversification Opportunities for Royce Opportunity and Western Asset
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Royce and Western is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Royce Opportunity Fund and Western Asset Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Interm and Royce Opportunity 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 Royce Opportunity 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 Interm has no effect on the direction of Royce Opportunity i.e., Royce Opportunity and Western Asset go up and down completely randomly.
Pair Corralation between Royce Opportunity and Western Asset
Assuming the 90 days horizon Royce Opportunity Fund is expected to generate 5.05 times more return on investment than Western Asset. However, Royce Opportunity is 5.05 times more volatile than Western Asset Intermediate. It trades about 0.09 of its potential returns per unit of risk. Western Asset Intermediate is currently generating about 0.19 per unit of risk. If you would invest 1,723 in Royce Opportunity Fund on September 12, 2024 and sell it today you would earn a total of 32.00 from holding Royce Opportunity Fund or generate 1.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Royce Opportunity Fund vs. Western Asset Intermediate
Performance |
| Timeline |
| Royce Opportunity |
| Western Asset Interm |
Royce Opportunity and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royce Opportunity and Western Asset
The main advantage of trading using opposite Royce Opportunity and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royce Opportunity 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.| Royce Opportunity vs. Royce Micro Cap Fund | Royce Opportunity vs. Royce Total Return | Royce Opportunity vs. Royce Special Equity | Royce Opportunity vs. Longleaf Partners Fund |
| Western Asset vs. SCOR PK | Western Asset vs. Morningstar Unconstrained Allocation | Western Asset vs. Via Renewables | Western Asset vs. Bondbloxx ETF Trust |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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