Correlation Between Siit Emerging and Western Asset
Can any of the company-specific risk be diversified away by investing in both Siit Emerging 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 Siit Emerging and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siit Emerging Markets and Western Asset Managed, you can compare the effects of market volatilities on Siit Emerging 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 Siit Emerging with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siit Emerging and Western Asset.
Diversification Opportunities for Siit Emerging and Western Asset
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Siit and Western is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Siit Emerging Markets and Western Asset Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Managed and Siit Emerging 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 Siit Emerging Markets 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 Managed has no effect on the direction of Siit Emerging i.e., Siit Emerging and Western Asset go up and down completely randomly.
Pair Corralation between Siit Emerging and Western Asset
Assuming the 90 days horizon Siit Emerging Markets is expected to under-perform the Western Asset. In addition to that, Siit Emerging is 2.0 times more volatile than Western Asset Managed. It trades about -0.15 of its total potential returns per unit of risk. Western Asset Managed is currently generating about 0.07 per unit of volatility. If you would invest 1,501 in Western Asset Managed on August 28, 2024 and sell it today you would earn a total of 8.00 from holding Western Asset Managed or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Siit Emerging Markets vs. Western Asset Managed
Performance |
| Timeline |
| Siit Emerging Markets |
| Western Asset Managed |
Siit Emerging and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siit Emerging and Western Asset
The main advantage of trading using opposite Siit Emerging and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siit Emerging 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.| Siit Emerging vs. Dreyfus Natural Resources | Siit Emerging vs. Franklin Natural Resources | Siit Emerging vs. Alpsalerian Energy Infrastructure | Siit Emerging vs. Short Oil Gas |
| Western Asset vs. Extended Market Index | Western Asset vs. Ab All Market | Western Asset vs. Siit Emerging Markets | Western Asset vs. Doubleline Emerging Markets |
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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