Correlation Between Western Asset and Emerald Growth
Can any of the company-specific risk be diversified away by investing in both Western Asset and Emerald 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 Emerald Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Premier and Emerald Growth Fund, you can compare the effects of market volatilities on Western Asset and Emerald 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 Emerald Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Emerald Growth.
Diversification Opportunities for Western Asset and Emerald Growth
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Emerald is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Premier and Emerald Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Growth 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 Premier are associated (or correlated) with Emerald Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Growth has no effect on the direction of Western Asset i.e., Western Asset and Emerald Growth go up and down completely randomly.
Pair Corralation between Western Asset and Emerald Growth
If you would invest 2,654 in Emerald Growth Fund on September 1, 2024 and sell it today you would earn a total of 315.00 from holding Emerald Growth Fund or generate 11.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset Premier vs. Emerald Growth Fund
Performance |
| Timeline |
| Western Asset Premier |
| Emerald Growth |
Western Asset and Emerald Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Emerald Growth
The main advantage of trading using opposite Western Asset and Emerald Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Emerald 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 Emerald Growth will offset losses from the drop in Emerald Growth's long position.| Western Asset vs. Chartwell Small Cap | Western Asset vs. Small Pany Growth | Western Asset vs. Qs Small Capitalization | Western Asset vs. Legg Mason Partners |
| Emerald Growth vs. Emerald Banking And | Emerald Growth vs. Emerald Growth Fund | Emerald Growth vs. Emerald Insights Fund | Emerald Growth vs. Emerald Insights Fund |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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