Correlation Between Western Asset and International Fund
Can any of the company-specific risk be diversified away by investing in both Western Asset and International Fund 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 International Fund 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 International Fund International, you can compare the effects of market volatilities on Western Asset and International Fund 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 International Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and International Fund.
Diversification Opportunities for Western Asset and International Fund
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between WESTERN and International is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset E and International Fund Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International 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 International Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Fund has no effect on the direction of Western Asset i.e., Western Asset and International Fund go up and down completely randomly.
Pair Corralation between Western Asset and International Fund
Assuming the 90 days horizon Western Asset is expected to generate 1.59 times less return on investment than International Fund. But when comparing it to its historical volatility, Western Asset E is 1.32 times less risky than International Fund. It trades about 0.08 of its potential returns per unit of risk. International Fund International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,120 in International Fund International on August 29, 2024 and sell it today you would earn a total of 590.00 from holding International Fund International or generate 18.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset E vs. International Fund Internation
Performance |
| Timeline |
| Western Asset E |
| International Fund |
Western Asset and International Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and International Fund
The main advantage of trading using opposite Western Asset and International Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, International Fund 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 International Fund will offset losses from the drop in International Fund's long position.| Western Asset vs. Doubleline Total Return | Western Asset vs. Metropolitan West Total | Western Asset vs. Thompson Bond Fund | Western Asset vs. Tcw E Fixed |
| International Fund vs. Large Cap Growth | International Fund vs. Parnassus Mid Cap | International Fund vs. Parnassus E Equity | International Fund vs. Doubleline Total Return |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |