Correlation Between Western Asset and Qs Growth
Can any of the company-specific risk be diversified away by investing in both Western Asset and Qs Growth 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 Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset E and Qs Growth Fund, you can compare the effects of market volatilities on Western Asset and Qs Growth 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 Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Qs Growth.
Diversification Opportunities for Western Asset and Qs Growth
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and SCHCX is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset E and Qs Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Growth Fund 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 E are associated (or correlated) with Qs Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Growth Fund has no effect on the direction of Western Asset i.e., Western Asset and Qs Growth go up and down completely randomly.
Pair Corralation between Western Asset and Qs Growth
Assuming the 90 days horizon Western Asset E is expected to under-perform the Qs Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset E is 2.04 times less risky than Qs Growth. The mutual fund trades about -0.11 of its potential returns per unit of risk. The Qs Growth Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,648 in Qs Growth Fund on August 24, 2024 and sell it today you would earn a total of 25.00 from holding Qs Growth Fund or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Western Asset E vs. Qs Growth Fund
Performance |
| Timeline |
| Western Asset E |
| Qs Growth Fund |
Western Asset and Qs Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Qs Growth
The main advantage of trading using opposite Western Asset and Qs Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Qs Growth 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 Growth will offset losses from the drop in Qs Growth's long position.| Western Asset vs. Vanguard Total Bond | Western Asset vs. Vanguard Total Bond | Western Asset vs. Vanguard Total Bond | Western Asset vs. Vanguard Total Bond |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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