Correlation Between Western Assets and Ep Emerging
Can any of the company-specific risk be diversified away by investing in both Western Assets and Ep Emerging 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 Ep Emerging 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 Ep Emerging Markets, you can compare the effects of market volatilities on Western Assets and Ep Emerging 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 Ep Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Ep Emerging.
Diversification Opportunities for Western Assets and Ep Emerging
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and EPEIX is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Ep Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ep Emerging Markets 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 Ep Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ep Emerging Markets has no effect on the direction of Western Assets i.e., Western Assets and Ep Emerging go up and down completely randomly.
Pair Corralation between Western Assets and Ep Emerging
Assuming the 90 days horizon Western Assets Emerging is expected to generate 0.54 times more return on investment than Ep Emerging. However, Western Assets Emerging is 1.87 times less risky than Ep Emerging. It trades about 0.07 of its potential returns per unit of risk. Ep Emerging Markets is currently generating about 0.01 per unit of risk. If you would invest 871.00 in Western Assets Emerging on January 11, 2025 and sell it today you would earn a total of 123.00 from holding Western Assets Emerging or generate 14.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Western Assets Emerging vs. Ep Emerging Markets
Performance |
| Timeline |
| Western Assets Emerging |
| Ep Emerging Markets |
Western Assets and Ep Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Ep Emerging
The main advantage of trading using opposite Western Assets and Ep Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Ep Emerging 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 Ep Emerging will offset losses from the drop in Ep Emerging's long position.| Western Assets vs. Oakmark Select Fund | Western Assets vs. Vanguard Large Cap Index | Western Assets vs. American Mutual Fund | Western Assets vs. T Rowe Price |
| Ep Emerging vs. Ep Emerging Markets | Ep Emerging vs. Europac International Bond | Ep Emerging vs. Europac International Dividend | Ep Emerging vs. Europac International Dividend |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |