Correlation Between Western Asset and Perkins Select
Can any of the company-specific risk be diversified away by investing in both Western Asset and Perkins Select 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 Perkins Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset High and Perkins Select Value, you can compare the effects of market volatilities on Western Asset and Perkins Select 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 Perkins Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Perkins Select.
Diversification Opportunities for Western Asset and Perkins Select
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Perkins is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Perkins Select Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perkins Select 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 High are associated (or correlated) with Perkins Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perkins Select Value has no effect on the direction of Western Asset i.e., Western Asset and Perkins Select go up and down completely randomly.
Pair Corralation between Western Asset and Perkins Select
Assuming the 90 days horizon Western Asset High is expected to generate 0.06 times more return on investment than Perkins Select. However, Western Asset High is 15.72 times less risky than Perkins Select. It trades about 0.11 of its potential returns per unit of risk. Perkins Select Value is currently generating about -0.17 per unit of risk. If you would invest 706.00 in Western Asset High on September 13, 2024 and sell it today you would earn a total of 2.00 from holding Western Asset High or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Perkins Select Value
Performance |
| Timeline |
| Western Asset High |
| Perkins Select Value |
Western Asset and Perkins Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Perkins Select
The main advantage of trading using opposite Western Asset and Perkins Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Perkins Select 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 Perkins Select will offset losses from the drop in Perkins Select's long position.| Western Asset vs. Guggenheim Risk Managed | Western Asset vs. Simt Real Estate | Western Asset vs. Redwood Real Estate | Western Asset vs. Vy Clarion Real |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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