Correlation Between Western Assets and Pace High
Can any of the company-specific risk be diversified away by investing in both Western Assets and Pace High 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 Pace High 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 Pace High Yield, you can compare the effects of market volatilities on Western Assets and Pace High 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 Pace High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Pace High.
Diversification Opportunities for Western Assets and Pace High
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Pace is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Pace High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace High Yield 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 Pace High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace High Yield has no effect on the direction of Western Assets i.e., Western Assets and Pace High go up and down completely randomly.
Pair Corralation between Western Assets and Pace High
Assuming the 90 days horizon Western Assets Emerging is expected to generate 1.78 times more return on investment than Pace High. However, Western Assets is 1.78 times more volatile than Pace High Yield. It trades about 0.1 of its potential returns per unit of risk. Pace High Yield is currently generating about 0.15 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Pace High Yield
Performance |
| Timeline |
| Western Assets Emerging |
| Pace High Yield |
Western Assets and Pace High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Pace High
The main advantage of trading using opposite Western Assets and Pace High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Pace High 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 Pace High will offset losses from the drop in Pace High'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 |
| Pace High vs. Western Assets Emerging | Pace High vs. Mondrian Emerging Markets | Pace High vs. Transamerica Emerging Markets | Pace High vs. Morgan Stanley Emerging |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |