Correlation Between Western Assets and Global Real
Can any of the company-specific risk be diversified away by investing in both Western Assets and Global Real 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 Global Real 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 Global Real Estate, you can compare the effects of market volatilities on Western Assets and Global Real 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 Global Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Global Real.
Diversification Opportunities for Western Assets and Global Real
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Global is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Global Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Real Estate 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 Global Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Real Estate has no effect on the direction of Western Assets i.e., Western Assets and Global Real go up and down completely randomly.
Pair Corralation between Western Assets and Global Real
Assuming the 90 days horizon Western Assets Emerging is expected to generate 0.42 times more return on investment than Global Real. However, Western Assets Emerging is 2.37 times less risky than Global Real. It trades about 0.09 of its potential returns per unit of risk. Global Real Estate is currently generating about 0.01 per unit of risk. If you would invest 895.00 in Western Assets Emerging on November 4, 2024 and sell it today you would earn a total of 177.00 from holding Western Assets Emerging or generate 19.78% 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. Global Real Estate
Performance |
| Timeline |
| Western Assets Emerging |
| Global Real Estate |
Western Assets and Global Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Global Real
The main advantage of trading using opposite Western Assets and Global Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Global Real 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 Global Real will offset losses from the drop in Global Real's long position.| Western Assets vs. Blackrock Large Cap | Western Assets vs. Tiaa Cref Large Cap Value | Western Assets vs. Ab Large Cap | Western Assets vs. Americafirst Large Cap |
| Global Real vs. Morningstar Global Income | Global Real vs. Tax Managed Large Cap | Global Real vs. Rbc Global Equity | Global Real vs. Transamerica Asset Allocation |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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