Correlation Between Western Assets and Secured Options
Can any of the company-specific risk be diversified away by investing in both Western Assets and Secured Options 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 Secured Options 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 Secured Options Portfolio, you can compare the effects of market volatilities on Western Assets and Secured Options 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 Secured Options. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Secured Options.
Diversification Opportunities for Western Assets and Secured Options
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Secured is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Secured Options Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secured Options Portfolio 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 Secured Options. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secured Options Portfolio has no effect on the direction of Western Assets i.e., Western Assets and Secured Options go up and down completely randomly.
Pair Corralation between Western Assets and Secured Options
Assuming the 90 days horizon Western Assets Emerging is expected to generate 1.14 times more return on investment than Secured Options. However, Western Assets is 1.14 times more volatile than Secured Options Portfolio. It trades about 0.14 of its potential returns per unit of risk. Secured Options Portfolio is currently generating about 0.14 per unit of risk. If you would invest 896.00 in Western Assets Emerging on September 12, 2024 and sell it today you would earn a total of 194.00 from holding Western Assets Emerging or generate 21.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Secured Options Portfolio
Performance |
| Timeline |
| Western Assets Emerging |
| Secured Options Portfolio |
Western Assets and Secured Options Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Secured Options
The main advantage of trading using opposite Western Assets and Secured Options positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Secured Options 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 Secured Options will offset losses from the drop in Secured Options' long position.| Western Assets vs. Cb Large Cap | Western Assets vs. American Mutual Fund | Western Assets vs. Americafirst Large Cap | Western Assets vs. Dodge Cox Stock |
| Secured Options vs. Artisan High Income | Secured Options vs. Ambrus Core Bond | Secured Options vs. Multisector Bond Sma | Secured Options vs. Franklin High Yield |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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