Correlation Between Scout Small and Western Asset
Can any of the company-specific risk be diversified away by investing in both Scout Small 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 Scout Small and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scout Small Cap and Western Asset Smash, you can compare the effects of market volatilities on Scout Small 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 Scout Small with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scout Small and Western Asset.
Diversification Opportunities for Scout Small and Western Asset
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Scout and Western is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Scout Small Cap and Western Asset Smash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Smash and Scout Small 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 Scout Small Cap 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 Smash has no effect on the direction of Scout Small i.e., Scout Small and Western Asset go up and down completely randomly.
Pair Corralation between Scout Small and Western Asset
Assuming the 90 days horizon Scout Small Cap is expected to generate 3.32 times more return on investment than Western Asset. However, Scout Small is 3.32 times more volatile than Western Asset Smash. It trades about 0.11 of its potential returns per unit of risk. Western Asset Smash is currently generating about 0.04 per unit of risk. If you would invest 2,443 in Scout Small Cap on September 14, 2024 and sell it today you would earn a total of 1,004 from holding Scout Small Cap or generate 41.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scout Small Cap vs. Western Asset Smash
Performance |
| Timeline |
| Scout Small Cap |
| Western Asset Smash |
Scout Small and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scout Small and Western Asset
The main advantage of trading using opposite Scout Small and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scout Small 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.| Scout Small vs. Carillon Chartwell Short | Scout Small vs. Chartwell Short Duration | Scout Small vs. Carillon Chartwell Short | Scout Small vs. Eagle Growth Income |
| Western Asset vs. Ab Small Cap | Western Asset vs. Scout Small Cap | Western Asset vs. Touchstone Small Cap | Western Asset vs. Df Dent Small |
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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