Correlation Between Western Asset and Western Asset
Can any of the company-specific risk be diversified away by investing in both Western Asset and Western 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 Western 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 Western Asset Total, you can compare the effects of market volatilities on Western Asset and Western 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Western Asset.
Diversification Opportunities for Western Asset and Western Asset
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WESTERN and Western is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset E and Western Asset Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Total 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Total has no effect on the direction of Western Asset i.e., Western Asset and Western Asset go up and down completely randomly.
Pair Corralation between Western Asset and Western Asset
Assuming the 90 days horizon Western Asset E is expected to generate 1.95 times more return on investment than Western Asset. However, Western Asset is 1.95 times more volatile than Western Asset Total. It trades about 0.12 of its potential returns per unit of risk. Western Asset Total is currently generating about 0.21 per unit of risk. If you would invest 920.00 in Western Asset E on August 30, 2024 and sell it today you would earn a total of 9.00 from holding Western Asset E or generate 0.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset E vs. Western Asset Total
Performance |
| Timeline |
| Western Asset E |
| Western Asset Total |
Western Asset and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Western Asset
The main advantage of trading using opposite Western Asset and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Western 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. HUMANA INC | Western Asset vs. Aquagold International | Western Asset vs. Barloworld Ltd ADR | Western Asset vs. Morningstar Unconstrained Allocation |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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