Correlation Between Western Asset and Americafirst Defensive
Can any of the company-specific risk be diversified away by investing in both Western Asset and Americafirst Defensive 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 Americafirst Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Inflation and Americafirst Defensive Growth, you can compare the effects of market volatilities on Western Asset and Americafirst Defensive 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 Americafirst Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Americafirst Defensive.
Diversification Opportunities for Western Asset and Americafirst Defensive
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Americafirst is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and Americafirst Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americafirst Defensive 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 Inflation are associated (or correlated) with Americafirst Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americafirst Defensive has no effect on the direction of Western Asset i.e., Western Asset and Americafirst Defensive go up and down completely randomly.
Pair Corralation between Western Asset and Americafirst Defensive
Assuming the 90 days horizon Western Asset is expected to generate 2.31 times less return on investment than Americafirst Defensive. In addition to that, Western Asset is 1.22 times more volatile than Americafirst Defensive Growth. It trades about 0.05 of its total potential returns per unit of risk. Americafirst Defensive Growth is currently generating about 0.15 per unit of volatility. If you would invest 929.00 in Americafirst Defensive Growth on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Americafirst Defensive Growth or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. Americafirst Defensive Growth
Performance |
| Timeline |
| Western Asset Inflation |
| Americafirst Defensive |
Western Asset and Americafirst Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Americafirst Defensive
The main advantage of trading using opposite Western Asset and Americafirst Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Americafirst Defensive 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 Americafirst Defensive will offset losses from the drop in Americafirst Defensive's long position.| Western Asset vs. Eventide Healthcare Life | Western Asset vs. Live Oak Health | Western Asset vs. Alger Health Sciences | Western Asset vs. Prudential Health Sciences |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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