Correlation Between Western Asset and State Street
Can any of the company-specific risk be diversified away by investing in both Western Asset and State Street 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 State Street 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 State Street Target, you can compare the effects of market volatilities on Western Asset and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and State Street.
Diversification Opportunities for Western Asset and State Street
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and State is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Target has no effect on the direction of Western Asset i.e., Western Asset and State Street go up and down completely randomly.
Pair Corralation between Western Asset and State Street
Assuming the 90 days horizon Western Asset High is expected to generate 0.6 times more return on investment than State Street. However, Western Asset High is 1.66 times less risky than State Street. It trades about 0.23 of its potential returns per unit of risk. State Street Target is currently generating about 0.07 per unit of risk. If you would invest 700.00 in Western Asset High on August 26, 2024 and sell it today you would earn a total of 6.00 from holding Western Asset High or generate 0.86% 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. State Street Target
Performance |
| Timeline |
| Western Asset High |
| State Street Target |
Western Asset and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and State Street
The main advantage of trading using opposite Western Asset and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street'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 |
| State Street vs. Western Asset High | State Street vs. Needham Aggressive Growth | State Street vs. Metropolitan West High | State Street vs. Pioneer High Income |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance |