Correlation Between Qs Moderate and Western Asset
Can any of the company-specific risk be diversified away by investing in both Qs Moderate 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 Moderate 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 Moderate Growth and Western Asset Inflation, you can compare the effects of market volatilities on Qs Moderate 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 Moderate with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qs Moderate and Western Asset.
Diversification Opportunities for Qs Moderate and Western Asset
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SCGCX and Western is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Qs Moderate Growth and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation and Qs Moderate 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 Moderate Growth 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 Inflation has no effect on the direction of Qs Moderate i.e., Qs Moderate and Western Asset go up and down completely randomly.
Pair Corralation between Qs Moderate and Western Asset
Assuming the 90 days horizon Qs Moderate Growth is expected to generate 2.2 times more return on investment than Western Asset. However, Qs Moderate is 2.2 times more volatile than Western Asset Inflation. It trades about 0.15 of its potential returns per unit of risk. Western Asset Inflation is currently generating about -0.05 per unit of risk. If you would invest 1,816 in Qs Moderate Growth on August 28, 2024 and sell it today you would earn a total of 35.00 from holding Qs Moderate Growth or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qs Moderate Growth vs. Western Asset Inflation
Performance |
| Timeline |
| Qs Moderate Growth |
| Western Asset Inflation |
Qs Moderate and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qs Moderate and Western Asset
The main advantage of trading using opposite Qs Moderate and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qs Moderate 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 Moderate vs. Clearbridge Aggressive Growth | Qs Moderate vs. Clearbridge Small Cap | Qs Moderate vs. Qs International Equity | Qs Moderate vs. Clearbridge Appreciation Fund |
| 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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