Correlation Between Western Asset and Sa Mkt
Can any of the company-specific risk be diversified away by investing in both Western Asset and Sa Mkt 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 Sa Mkt 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 Sa Mkt Fd, you can compare the effects of market volatilities on Western Asset and Sa Mkt 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 Sa Mkt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Sa Mkt.
Diversification Opportunities for Western Asset and Sa Mkt
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and SAMKX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Sa Mkt Fd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sa Mkt Fd 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 Sa Mkt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sa Mkt Fd has no effect on the direction of Western Asset i.e., Western Asset and Sa Mkt go up and down completely randomly.
Pair Corralation between Western Asset and Sa Mkt
Assuming the 90 days horizon Western Asset is expected to generate 2.09 times less return on investment than Sa Mkt. But when comparing it to its historical volatility, Western Asset High is 2.76 times less risky than Sa Mkt. It trades about 0.15 of its potential returns per unit of risk. Sa Mkt Fd is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,791 in Sa Mkt Fd on September 12, 2024 and sell it today you would earn a total of 951.00 from holding Sa Mkt Fd or generate 34.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset High vs. Sa Mkt Fd
Performance |
| Timeline |
| Western Asset High |
| Sa Mkt Fd |
Western Asset and Sa Mkt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Sa Mkt
The main advantage of trading using opposite Western Asset and Sa Mkt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Sa Mkt 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 Sa Mkt will offset losses from the drop in Sa Mkt's long position.| Western Asset vs. SCOR PK | Western Asset vs. Morningstar Unconstrained Allocation | Western Asset vs. Via Renewables | Western Asset vs. Bondbloxx ETF Trust |
| Sa Mkt vs. Vanguard Total Stock | Sa Mkt vs. Vanguard 500 Index | Sa Mkt vs. Vanguard Total Stock | Sa Mkt vs. Vanguard Total Stock |
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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