Correlation Between 1919 Financial and Western Asset
Can any of the company-specific risk be diversified away by investing in both 1919 Financial 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 1919 Financial and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 1919 Financial Services and Western Asset Mortgage, you can compare the effects of market volatilities on 1919 Financial 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 1919 Financial with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1919 Financial and Western Asset.
Diversification Opportunities for 1919 Financial and Western Asset
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 1919 and Western is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding 1919 Financial Services and Western Asset Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Mortgage and 1919 Financial 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 1919 Financial Services 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 Mortgage has no effect on the direction of 1919 Financial i.e., 1919 Financial and Western Asset go up and down completely randomly.
Pair Corralation between 1919 Financial and Western Asset
Assuming the 90 days horizon 1919 Financial Services is expected to generate 2.5 times more return on investment than Western Asset. However, 1919 Financial is 2.5 times more volatile than Western Asset Mortgage. It trades about 0.15 of its potential returns per unit of risk. Western Asset Mortgage is currently generating about 0.07 per unit of risk. If you would invest 2,418 in 1919 Financial Services on August 31, 2024 and sell it today you would earn a total of 1,021 from holding 1919 Financial Services or generate 42.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
1919 Financial Services vs. Western Asset Mortgage
Performance |
| Timeline |
| 1919 Financial Services |
| Western Asset Mortgage |
1919 Financial and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 1919 Financial and Western Asset
The main advantage of trading using opposite 1919 Financial and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1919 Financial 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.| 1919 Financial vs. Gabelli Global Financial | 1919 Financial vs. Mesirow Financial Small | 1919 Financial vs. Mesirow Financial Small | 1919 Financial vs. Icon Financial Fund |
| Western Asset vs. Mesirow Financial Small | Western Asset vs. Davis Financial Fund | Western Asset vs. 1919 Financial Services | Western Asset vs. Fidelity Advisor Financial |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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