Correlation Between Government Securities and Western Asset

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Can any of the company-specific risk be diversified away by investing in both Government Securities 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 Government Securities and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Government Securities Fund and Western Asset Government, you can compare the effects of market volatilities on Government Securities 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 Government Securities with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Government Securities and Western Asset.

Diversification Opportunities for Government Securities and Western Asset

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Government and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Government Securities Fund and Western Asset Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Government and Government Securities 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 Government Securities Fund 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 Government has no effect on the direction of Government Securities i.e., Government Securities and Western Asset go up and down completely randomly.

Pair Corralation between Government Securities and Western Asset

If you would invest  878.00  in Government Securities Fund on August 29, 2024 and sell it today you would earn a total of  3.00  from holding Government Securities Fund or generate 0.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Government Securities Fund  vs.  Western Asset Government

 Performance 
       Timeline  
Government Securities 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Government Securities Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Government Securities is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Western Asset Government 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Western Asset Government has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Western Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Government Securities and Western Asset Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Government Securities and Western Asset

The main advantage of trading using opposite Government Securities and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Government Securities 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 Government Securities Fund and Western Asset Government 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.
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..

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