Correlation Between Western Asset and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Western Asset and Old Westbury 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 Old Westbury 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 Old Westbury All, you can compare the effects of market volatilities on Western Asset and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Old Westbury.
Diversification Opportunities for Western Asset and Old Westbury
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Old is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset High and Old Westbury All in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury All 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury All has no effect on the direction of Western Asset i.e., Western Asset and Old Westbury go up and down completely randomly.
Pair Corralation between Western Asset and Old Westbury
Assuming the 90 days horizon Western Asset is expected to generate 4.45 times less return on investment than Old Westbury. But when comparing it to its historical volatility, Western Asset High is 4.54 times less risky than Old Westbury. It trades about 0.19 of its potential returns per unit of risk. Old Westbury All is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,673 in Old Westbury All on September 2, 2024 and sell it today you would earn a total of 230.00 from holding Old Westbury All or generate 8.6% 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. Old Westbury All
Performance |
| Timeline |
| Western Asset High |
| Old Westbury All |
Western Asset and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Old Westbury
The main advantage of trading using opposite Western Asset and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury's long position.| Western Asset vs. Transamerica Emerging Markets | Western Asset vs. Pnc Emerging Markets | Western Asset vs. Locorr Market Trend | Western Asset vs. Aqr Sustainable Long Short |
| Old Westbury vs. Precious Metals And | Old Westbury vs. International Investors Gold | Old Westbury vs. Short Precious Metals | Old Westbury vs. Global Gold Fund |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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