Correlation Between Western Asset and Integrity Growth
Can any of the company-specific risk be diversified away by investing in both Western Asset and Integrity 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 Integrity Growth 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 Integrity Growth Income, you can compare the effects of market volatilities on Western Asset and Integrity 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 Integrity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Integrity Growth.
Diversification Opportunities for Western Asset and Integrity Growth
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Integrity is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and Integrity Growth Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrity Growth Income 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 Integrity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrity Growth Income has no effect on the direction of Western Asset i.e., Western Asset and Integrity Growth go up and down completely randomly.
Pair Corralation between Western Asset and Integrity Growth
Assuming the 90 days horizon Western Asset Inflation is expected to generate 0.23 times more return on investment than Integrity Growth. However, Western Asset Inflation is 4.36 times less risky than Integrity Growth. It trades about -0.31 of its potential returns per unit of risk. Integrity Growth Income is currently generating about -0.25 per unit of risk. If you would invest 930.00 in Western Asset Inflation on October 13, 2024 and sell it today you would lose (13.00) from holding Western Asset Inflation or give up 1.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Western Asset Inflation vs. Integrity Growth Income
Performance |
| Timeline |
| Western Asset Inflation |
| Integrity Growth Income |
Western Asset and Integrity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Integrity Growth
The main advantage of trading using opposite Western Asset and Integrity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Integrity 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 Integrity Growth will offset losses from the drop in Integrity Growth's long position.| Western Asset vs. Ashmore Emerging Markets | Western Asset vs. Wcm Focused Emerging | Western Asset vs. Black Oak Emerging | Western Asset vs. Virtus Multi Strategy Target |
| Integrity Growth vs. Northern Small Cap | Integrity Growth vs. T Rowe Price | Integrity Growth vs. Davenport Small Cap | Integrity Growth vs. Stone Ridge Diversified |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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