Correlation Between Western Asset and Alternative Asset
Can any of the company-specific risk be diversified away by investing in both Western Asset and Alternative Asset 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 Alternative Asset 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 Alternative Asset Allocation, you can compare the effects of market volatilities on Western Asset and Alternative Asset 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 Alternative Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Alternative Asset.
Diversification Opportunities for Western Asset and Alternative Asset
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Alternative is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset E and Alternative Asset Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Asset 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 Alternative Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Asset has no effect on the direction of Western Asset i.e., Western Asset and Alternative Asset go up and down completely randomly.
Pair Corralation between Western Asset and Alternative Asset
Assuming the 90 days horizon Western Asset is expected to generate 1.87 times less return on investment than Alternative Asset. In addition to that, Western Asset is 1.7 times more volatile than Alternative Asset Allocation. It trades about 0.1 of its total potential returns per unit of risk. Alternative Asset Allocation is currently generating about 0.32 per unit of volatility. If you would invest 1,593 in Alternative Asset Allocation on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Alternative Asset Allocation or generate 1.26% 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. Alternative Asset Allocation
Performance |
| Timeline |
| Western Asset E |
| Alternative Asset |
Western Asset and Alternative Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Alternative Asset
The main advantage of trading using opposite Western Asset and Alternative Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Alternative Asset 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 Alternative Asset will offset losses from the drop in Alternative Asset's long position.| Western Asset vs. Six Circles Credit | Western Asset vs. Tiaa Cref High Yield | Western Asset vs. Simt High Yield | Western Asset vs. Guggenheim High Yield |
| Alternative Asset vs. Qs Global Equity | Alternative Asset vs. Kinetics Global Fund | Alternative Asset vs. Wisdomtree Siegel Global | Alternative Asset vs. Ab Global Bond |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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