Correlation Between Western Asset and Towle Deep
Can any of the company-specific risk be diversified away by investing in both Western Asset and Towle Deep 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 Towle Deep 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 Towle Deep Value, you can compare the effects of market volatilities on Western Asset and Towle Deep 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 Towle Deep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Towle Deep.
Diversification Opportunities for Western Asset and Towle Deep
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Towle is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Premier and Towle Deep Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Towle Deep Value 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 Towle Deep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Towle Deep Value has no effect on the direction of Western Asset i.e., Western Asset and Towle Deep go up and down completely randomly.
Pair Corralation between Western Asset and Towle Deep
Assuming the 90 days horizon Western Asset Premier is expected to generate 0.08 times more return on investment than Towle Deep. However, Western Asset Premier is 11.93 times less risky than Towle Deep. It trades about 0.13 of its potential returns per unit of risk. Towle Deep Value is currently generating about 0.0 per unit of risk. If you would invest 98.00 in Western Asset Premier on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Western Asset Premier or generate 2.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Western Asset Premier vs. Towle Deep Value
Performance |
| Timeline |
| Western Asset Premier |
| Towle Deep Value |
Western Asset and Towle Deep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Towle Deep
The main advantage of trading using opposite Western Asset and Towle Deep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Towle Deep 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 Towle Deep will offset losses from the drop in Towle Deep's long position.| Western Asset vs. Angel Oak Multi Strategy | Western Asset vs. T Rowe Price | Western Asset vs. Dodge Cox Emerging | Western Asset vs. T Rowe Price |
| Towle Deep vs. Vanguard Small Cap Value | Towle Deep vs. Vanguard Small Cap Value | Towle Deep vs. American Beacon Small |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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