Correlation Between Western Asset and Deutsche Small
Can any of the company-specific risk be diversified away by investing in both Western Asset and Deutsche Small 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 Deutsche Small 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 Deutsche Small Cap, you can compare the effects of market volatilities on Western Asset and Deutsche Small 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 Deutsche Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Deutsche Small.
Diversification Opportunities for Western Asset and Deutsche Small
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Deutsche is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and Deutsche Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deutsche Small Cap 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 Deutsche Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deutsche Small Cap has no effect on the direction of Western Asset i.e., Western Asset and Deutsche Small go up and down completely randomly.
Pair Corralation between Western Asset and Deutsche Small
Assuming the 90 days horizon Western Asset is expected to generate 7.0 times less return on investment than Deutsche Small. But when comparing it to its historical volatility, Western Asset Inflation is 2.76 times less risky than Deutsche Small. It trades about 0.02 of its potential returns per unit of risk. Deutsche Small Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,014 in Deutsche Small Cap on September 3, 2024 and sell it today you would earn a total of 839.00 from holding Deutsche Small Cap or generate 27.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. Deutsche Small Cap
Performance |
| Timeline |
| Western Asset Inflation |
| Deutsche Small Cap |
Western Asset and Deutsche Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Deutsche Small
The main advantage of trading using opposite Western Asset and Deutsche Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Deutsche Small 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 Deutsche Small will offset losses from the drop in Deutsche Small's long position.| Western Asset vs. Blackrock Sm Cap | Western Asset vs. Principal Lifetime Hybrid | Western Asset vs. Adams Diversified Equity | Western Asset vs. Lord Abbett Diversified |
| Deutsche Small vs. Rationalpier 88 Convertible | Deutsche Small vs. Ms Global Fixed | Deutsche Small vs. Dreyfusstandish Global Fixed | Deutsche Small vs. Limited Term Tax |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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