Correlation Between Western Asset and Victory High
Can any of the company-specific risk be diversified away by investing in both Western Asset and Victory High 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 Victory High 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 Victory High Income, you can compare the effects of market volatilities on Western Asset and Victory High 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 Victory High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Victory High.
Diversification Opportunities for Western Asset and Victory High
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and VICTORY is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Victory High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory High 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 High are associated (or correlated) with Victory High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory High Income has no effect on the direction of Western Asset i.e., Western Asset and Victory High go up and down completely randomly.
Pair Corralation between Western Asset and Victory High
Assuming the 90 days horizon Western Asset is expected to generate 1.88 times less return on investment than Victory High. But when comparing it to its historical volatility, Western Asset High is 2.72 times less risky than Victory High. It trades about 0.24 of its potential returns per unit of risk. Victory High Income is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 956.00 in Victory High Income on August 25, 2024 and sell it today you would earn a total of 16.00 from holding Victory High Income or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Western Asset High vs. Victory High Income
Performance |
| Timeline |
| Western Asset High |
| Victory High Income |
Western Asset and Victory High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Victory High
The main advantage of trading using opposite Western Asset and Victory High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Victory High 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 Victory High will offset losses from the drop in Victory High's long position.| Western Asset vs. Legg Mason Bw | Western Asset vs. Alternative Asset Allocation | Western Asset vs. Enhanced Large Pany | Western Asset vs. Falcon Focus Scv |
| Victory High vs. Victory Rs International | Victory High vs. Victory High Yield | Victory High vs. Victory Sycamore Established | Victory High vs. Victory Munder Multi Cap |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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