Correlation Between Western Asset and Specialized Technology
Can any of the company-specific risk be diversified away by investing in both Western Asset and Specialized Technology 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 Specialized Technology 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 Specialized Technology Fund, you can compare the effects of market volatilities on Western Asset and Specialized Technology 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 Specialized Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Specialized Technology.
Diversification Opportunities for Western Asset and Specialized Technology
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and SPECIALIZED is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Inflation and Specialized Technology Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Specialized Technology 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 Specialized Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Specialized Technology has no effect on the direction of Western Asset i.e., Western Asset and Specialized Technology go up and down completely randomly.
Pair Corralation between Western Asset and Specialized Technology
Assuming the 90 days horizon Western Asset Inflation is expected to generate 0.29 times more return on investment than Specialized Technology. However, Western Asset Inflation is 3.42 times less risky than Specialized Technology. It trades about 0.23 of its potential returns per unit of risk. Specialized Technology Fund is currently generating about -0.29 per unit of risk. If you would invest 932.00 in Western Asset Inflation on December 5, 2024 and sell it today you would earn a total of 14.00 from holding Western Asset Inflation or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Inflation vs. Specialized Technology Fund
Performance |
| Timeline |
| Western Asset Inflation |
| Specialized Technology |
Western Asset and Specialized Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Specialized Technology
The main advantage of trading using opposite Western Asset and Specialized Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Specialized Technology 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 Specialized Technology will offset losses from the drop in Specialized Technology's long position.| Western Asset vs. Putnam Global Health | Western Asset vs. Tekla Healthcare Investors | Western Asset vs. Eventide Healthcare Life | Western Asset vs. Health Care Ultrasector |
| Specialized Technology vs. Tiaa Cref Funds | Specialized Technology vs. Doubleline Emerging Markets | Specialized Technology vs. Pace Select Advisors | Specialized Technology vs. Collegeadvantage 529 Savings |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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