Correlation Between Western Asset and Qs Defensive
Can any of the company-specific risk be diversified away by investing in both Western Asset and Qs Defensive 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 Defensive 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 Defensive Growth, you can compare the effects of market volatilities on Western Asset and Qs Defensive 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 Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Qs Defensive.
Diversification Opportunities for Western Asset and Qs Defensive
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and SBCPX is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Smash and Qs Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Defensive Growth 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 Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Defensive Growth has no effect on the direction of Western Asset i.e., Western Asset and Qs Defensive go up and down completely randomly.
Pair Corralation between Western Asset and Qs Defensive
Assuming the 90 days horizon Western Asset is expected to generate 2.19 times less return on investment than Qs Defensive. But when comparing it to its historical volatility, Western Asset Smash is 2.27 times less risky than Qs Defensive. It trades about 0.14 of its potential returns per unit of risk. Qs Defensive Growth is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,260 in Qs Defensive Growth on September 1, 2024 and sell it today you would earn a total of 79.00 from holding Qs Defensive Growth or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Western Asset Smash vs. Qs Defensive Growth
Performance |
| Timeline |
| Western Asset Smash |
| Qs Defensive Growth |
Western Asset and Qs Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Qs Defensive
The main advantage of trading using opposite Western Asset and Qs Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Qs Defensive 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 Defensive will offset losses from the drop in Qs Defensive's long position.| Western Asset vs. Federated Ultrashort Bond | Western Asset vs. Aqr Long Short Equity | Western Asset vs. Quantitative Longshort Equity | Western Asset vs. Touchstone Ultra Short |
| Qs Defensive vs. Icon Equity Income | Qs Defensive vs. Balanced Fund Retail | Qs Defensive vs. Calamos Global Equity | Qs Defensive vs. Artisan Select Equity |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |