Correlation Between Western Asset and International Small
Can any of the company-specific risk be diversified away by investing in both Western Asset and International 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 International Small 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 International Small Pany, you can compare the effects of market volatilities on Western Asset and International 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 International Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and International Small.
Diversification Opportunities for Western Asset and International Small
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and International is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and International Small Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Small Pany 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 International Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Small Pany has no effect on the direction of Western Asset i.e., Western Asset and International Small go up and down completely randomly.
Pair Corralation between Western Asset and International Small
Assuming the 90 days horizon Western Asset High is expected to generate 0.33 times more return on investment than International Small. However, Western Asset High is 3.04 times less risky than International Small. It trades about 0.15 of its potential returns per unit of risk. International Small Pany is currently generating about 0.03 per unit of risk. If you would invest 604.00 in Western Asset High on August 31, 2024 and sell it today you would earn a total of 104.00 from holding Western Asset High or generate 17.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Western Asset High vs. International Small Pany
Performance |
| Timeline |
| Western Asset High |
| International Small Pany |
Western Asset and International Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and International Small
The main advantage of trading using opposite Western Asset and International Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, International 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 International Small will offset losses from the drop in International Small's long position.| Western Asset vs. Vanguard High Yield Corporate | Western Asset vs. Vanguard High Yield Porate | Western Asset vs. Blackrock Hi Yld | Western Asset vs. Blackrock High Yield |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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