Correlation Between Qs Sp and Western Asset
Can any of the company-specific risk be diversified away by investing in both Qs Sp 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 Qs Sp and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Qs Sp 500 and Western Asset Adjustable, you can compare the effects of market volatilities on Qs Sp 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 Qs Sp with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Sp and Western Asset.
Diversification Opportunities for Qs Sp and Western Asset
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SBSDX and Western is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Qs Sp 500 and Western Asset Adjustable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Adjustable and Qs Sp 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 Qs Sp 500 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 Adjustable has no effect on the direction of Qs Sp i.e., Qs Sp and Western Asset go up and down completely randomly.
Pair Corralation between Qs Sp and Western Asset
Assuming the 90 days horizon Qs Sp 500 is expected to generate 10.51 times more return on investment than Western Asset. However, Qs Sp is 10.51 times more volatile than Western Asset Adjustable. It trades about 0.15 of its potential returns per unit of risk. Western Asset Adjustable is currently generating about 0.25 per unit of risk. If you would invest 4,591 in Qs Sp 500 on August 28, 2024 and sell it today you would earn a total of 119.00 from holding Qs Sp 500 or generate 2.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qs Sp 500 vs. Western Asset Adjustable
Performance |
| Timeline |
| Qs Sp 500 |
| Western Asset Adjustable |
Qs Sp and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qs Sp and Western Asset
The main advantage of trading using opposite Qs Sp and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Sp 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.| Qs Sp vs. Clearbridge Aggressive Growth | Qs Sp vs. Clearbridge Small Cap | Qs Sp vs. Qs International Equity | Qs Sp vs. Legg Mason Bw |
| 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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