Correlation Between Western Asset and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Western Asset and Transamerica Emerging 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 Transamerica Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Total and Transamerica Emerging Markets, you can compare the effects of market volatilities on Western Asset and Transamerica Emerging 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 Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Transamerica Emerging.
Diversification Opportunities for Western Asset and Transamerica Emerging
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Transamerica is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Total and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging 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 Total are associated (or correlated) with Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Western Asset i.e., Western Asset and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Western Asset and Transamerica Emerging
Assuming the 90 days horizon Western Asset Total is expected to generate 0.23 times more return on investment than Transamerica Emerging. However, Western Asset Total is 4.38 times less risky than Transamerica Emerging. It trades about -0.01 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about -0.21 per unit of risk. If you would invest 914.00 in Western Asset Total on September 3, 2024 and sell it today you would lose (1.00) from holding Western Asset Total or give up 0.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Total vs. Transamerica Emerging Markets
Performance |
| Timeline |
| Western Asset Total |
| Transamerica Emerging |
Western Asset and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Transamerica Emerging
The main advantage of trading using opposite Western Asset and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Transamerica Emerging 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 Transamerica Emerging will offset losses from the drop in Transamerica Emerging's long position.| Western Asset vs. Ab Small Cap | Western Asset vs. Oklahoma College Savings | Western Asset vs. Fisher Small Cap | Western Asset vs. Rbb Fund |
| Transamerica Emerging vs. Guggenheim High Yield | Transamerica Emerging vs. Lord Abbett High | Transamerica Emerging vs. Msift High Yield | Transamerica Emerging vs. Ppm High Yield |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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