Correlation Between Short Precious and Western Asset
Can any of the company-specific risk be diversified away by investing in both Short Precious 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 Short Precious and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Short Precious Metals and Western Asset Inflation, you can compare the effects of market volatilities on Short Precious 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 Short Precious with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Precious and Western Asset.
Diversification Opportunities for Short Precious and Western Asset
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Short and Western is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Short Precious Metals 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 Short Precious 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 Short Precious Metals 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 Short Precious i.e., Short Precious and Western Asset go up and down completely randomly.
Pair Corralation between Short Precious and Western Asset
Assuming the 90 days horizon Short Precious Metals is expected to under-perform the Western Asset. In addition to that, Short Precious is 4.6 times more volatile than Western Asset Inflation. It trades about -0.02 of its total potential returns per unit of risk. Western Asset Inflation is currently generating about 0.01 per unit of volatility. If you would invest 888.00 in Western Asset Inflation on September 2, 2024 and sell it today you would earn a total of 20.00 from holding Western Asset Inflation or generate 2.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Short Precious Metals vs. Western Asset Inflation
Performance |
| Timeline |
| Short Precious Metals |
| Western Asset Inflation |
Short Precious and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Short Precious and Western Asset
The main advantage of trading using opposite Short Precious and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Precious 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.| Short Precious vs. Ab Global Risk | Short Precious vs. Morgan Stanley Global | Short Precious vs. T Rowe Price | Short Precious vs. Pimco Global Multi Asset |
| Western Asset vs. Wasatch Global Opportunities | Western Asset vs. Pimco Global Multi Asset | Western Asset vs. Wisdomtree Siegel Global | Western Asset vs. Ms Global Fixed |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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