Correlation Between Precious Metals and Western Asset
Can any of the company-specific risk be diversified away by investing in both Precious Metals 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 Precious Metals and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precious Metals And and Western Asset E, you can compare the effects of market volatilities on Precious Metals 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 Precious Metals with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precious Metals and Western Asset.
Diversification Opportunities for Precious Metals and Western Asset
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Precious and Western is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Precious Metals And and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E and Precious Metals 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 Precious Metals And 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 E has no effect on the direction of Precious Metals i.e., Precious Metals and Western Asset go up and down completely randomly.
Pair Corralation between Precious Metals and Western Asset
Assuming the 90 days horizon Precious Metals And is expected to under-perform the Western Asset. In addition to that, Precious Metals is 5.19 times more volatile than Western Asset E. It trades about -0.13 of its total potential returns per unit of risk. Western Asset E is currently generating about 0.05 per unit of volatility. If you would invest 1,057 in Western Asset E on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Western Asset E or generate 0.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Precious Metals And vs. Western Asset E
Performance |
| Timeline |
| Precious Metals And |
| Western Asset E |
Precious Metals and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precious Metals and Western Asset
The main advantage of trading using opposite Precious Metals and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precious Metals 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.| Precious Metals vs. Oppenheimer Gold Special | Precious Metals vs. Global Gold Fund | Precious Metals vs. Goldman Sachs Clean | Precious Metals vs. Fidelity Advisor Gold |
| Western Asset vs. Vy Goldman Sachs | Western Asset vs. Gabelli Gold Fund | Western Asset vs. Precious Metals And | Western Asset vs. Gamco Global Gold |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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