Correlation Between Sprucegrove International and Western Asset
Can any of the company-specific risk be diversified away by investing in both Sprucegrove International 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 Sprucegrove International and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sprucegrove International Equity and Western Asset Global, you can compare the effects of market volatilities on Sprucegrove International 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 Sprucegrove International with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sprucegrove International and Western Asset.
Diversification Opportunities for Sprucegrove International and Western Asset
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sprucegrove and Western is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sprucegrove International Equi and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global and Sprucegrove International 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 Sprucegrove International Equity 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 Global has no effect on the direction of Sprucegrove International i.e., Sprucegrove International and Western Asset go up and down completely randomly.
Pair Corralation between Sprucegrove International and Western Asset
Assuming the 90 days horizon Sprucegrove International Equity is expected to generate 4.39 times more return on investment than Western Asset. However, Sprucegrove International is 4.39 times more volatile than Western Asset Global. It trades about 0.31 of its potential returns per unit of risk. Western Asset Global is currently generating about 0.11 per unit of risk. If you would invest 6,491 in Sprucegrove International Equity on November 3, 2024 and sell it today you would earn a total of 331.00 from holding Sprucegrove International Equity or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sprucegrove International Equi vs. Western Asset Global
Performance |
| Timeline |
| Sprucegrove International |
| Western Asset Global |
Sprucegrove International and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sprucegrove International and Western Asset
The main advantage of trading using opposite Sprucegrove International and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sprucegrove International 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.The idea behind Sprucegrove International Equity and Western Asset Global pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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