Correlation Between Western Asset and Resq Dynamic
Can any of the company-specific risk be diversified away by investing in both Western Asset and Resq Dynamic 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 Resq Dynamic 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 Resq Dynamic Allocation, you can compare the effects of market volatilities on Western Asset and Resq Dynamic 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 Resq Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Resq Dynamic.
Diversification Opportunities for Western Asset and Resq Dynamic
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and Resq is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Premier and Resq Dynamic Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resq Dynamic Allocation 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 Resq Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resq Dynamic Allocation has no effect on the direction of Western Asset i.e., Western Asset and Resq Dynamic go up and down completely randomly.
Pair Corralation between Western Asset and Resq Dynamic
Assuming the 90 days horizon Western Asset is expected to generate 3.69 times less return on investment than Resq Dynamic. But when comparing it to its historical volatility, Western Asset Premier is 6.91 times less risky than Resq Dynamic. It trades about 0.14 of its potential returns per unit of risk. Resq Dynamic Allocation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 880.00 in Resq Dynamic Allocation on August 26, 2024 and sell it today you would earn a total of 171.00 from holding Resq Dynamic Allocation or generate 19.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Premier vs. Resq Dynamic Allocation
Performance |
| Timeline |
| Western Asset Premier |
| Resq Dynamic Allocation |
Western Asset and Resq Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Resq Dynamic
The main advantage of trading using opposite Western Asset and Resq Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Resq Dynamic 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 Resq Dynamic will offset losses from the drop in Resq Dynamic's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Resq Dynamic vs. Rational Special Situations | Resq Dynamic vs. Omni Small Cap Value | Resq Dynamic vs. Ab E Opportunities | Resq Dynamic vs. Materials Portfolio Fidelity |
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 CEOs Directory module to screen CEOs from public companies around the world.
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