Correlation Between Western Assets and Embark Commodity
Can any of the company-specific risk be diversified away by investing in both Western Assets and Embark Commodity 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 Assets and Embark Commodity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Assets Emerging and Embark Commodity Strategy, you can compare the effects of market volatilities on Western Assets and Embark Commodity 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 Assets with a short position of Embark Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Embark Commodity.
Diversification Opportunities for Western Assets and Embark Commodity
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Western and Embark is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Embark Commodity Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embark Commodity Strategy and Western Assets 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 Assets Emerging are associated (or correlated) with Embark Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embark Commodity Strategy has no effect on the direction of Western Assets i.e., Western Assets and Embark Commodity go up and down completely randomly.
Pair Corralation between Western Assets and Embark Commodity
Assuming the 90 days horizon Western Assets Emerging is expected to generate 0.58 times more return on investment than Embark Commodity. However, Western Assets Emerging is 1.73 times less risky than Embark Commodity. It trades about 0.1 of its potential returns per unit of risk. Embark Commodity Strategy is currently generating about 0.03 per unit of risk. If you would invest 887.00 in Western Assets Emerging on September 3, 2024 and sell it today you would earn a total of 192.00 from holding Western Assets Emerging or generate 21.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 43.43% |
| Values | Daily Returns |
Western Assets Emerging vs. Embark Commodity Strategy
Performance |
| Timeline |
| Western Assets Emerging |
| Embark Commodity Strategy |
Western Assets and Embark Commodity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Embark Commodity
The main advantage of trading using opposite Western Assets and Embark Commodity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Embark Commodity 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 Embark Commodity will offset losses from the drop in Embark Commodity's long position.| Western Assets vs. Vanguard Total Stock | Western Assets vs. Vanguard 500 Index | Western Assets vs. Vanguard Total Stock | Western Assets vs. Vanguard Total Stock |
| Embark Commodity vs. Transamerica Emerging Markets | Embark Commodity vs. Locorr Market Trend | Embark Commodity vs. Western Assets Emerging | Embark Commodity vs. The Emerging Markets |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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