Correlation Between Western Asset and Qs Small
Can any of the company-specific risk be diversified away by investing in both Western Asset and Qs Small 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 Western Asset and Qs Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Smash and Qs Small Capitalization, you can compare the effects of market volatilities on Western Asset and Qs Small 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 Western Asset with a short position of Qs Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Qs Small.
Diversification Opportunities for Western Asset and Qs Small
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and LMBAX is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Smash and Qs Small Capitalization in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Small Capitalization and Western Asset 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 Western Asset Smash are associated (or correlated) with Qs Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Small Capitalization has no effect on the direction of Western Asset i.e., Western Asset and Qs Small go up and down completely randomly.
Pair Corralation between Western Asset and Qs Small
Assuming the 90 days horizon Western Asset is expected to generate 1.77 times less return on investment than Qs Small. But when comparing it to its historical volatility, Western Asset Smash is 6.91 times less risky than Qs Small. It trades about 0.16 of its potential returns per unit of risk. Qs Small Capitalization is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,238 in Qs Small Capitalization on November 3, 2024 and sell it today you would earn a total of 146.00 from holding Qs Small Capitalization or generate 11.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Western Asset Smash vs. Qs Small Capitalization
Performance |
| Timeline |
| Western Asset Smash |
| Qs Small Capitalization |
Western Asset and Qs Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Qs Small
The main advantage of trading using opposite Western Asset and Qs Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Qs Small 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 Qs Small will offset losses from the drop in Qs Small's long position.| Western Asset vs. Lord Abbett Inflation | Western Asset vs. Tiaa Cref Inflation Link | Western Asset vs. Asg Managed Futures | Western Asset vs. Arrow Managed Futures |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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