Correlation Between Western Assets and Rbc Small
Can any of the company-specific risk be diversified away by investing in both Western Assets and Rbc Small 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 Rbc Small 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 Rbc Small Cap, you can compare the effects of market volatilities on Western Assets and Rbc Small 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 Rbc Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Rbc Small.
Diversification Opportunities for Western Assets and Rbc Small
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Western and Rbc is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Rbc Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Small Cap 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 Rbc Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Small Cap has no effect on the direction of Western Assets i.e., Western Assets and Rbc Small go up and down completely randomly.
Pair Corralation between Western Assets and Rbc Small
Assuming the 90 days horizon Western Assets is expected to generate 7.97 times less return on investment than Rbc Small. But when comparing it to its historical volatility, Western Assets Emerging is 2.66 times less risky than Rbc Small. It trades about 0.1 of its potential returns per unit of risk. Rbc Small Cap is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,562 in Rbc Small Cap on October 29, 2024 and sell it today you would earn a total of 72.00 from holding Rbc Small Cap or generate 4.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Rbc Small Cap
Performance |
| Timeline |
| Western Assets Emerging |
| Rbc Small Cap |
Western Assets and Rbc Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Rbc Small
The main advantage of trading using opposite Western Assets and Rbc Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Rbc Small 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 Rbc Small will offset losses from the drop in Rbc Small's long position.| Western Assets vs. Great West Loomis Sayles | Western Assets vs. Fpa Queens Road | Western Assets vs. Lsv Small Cap | Western Assets vs. American Century Etf |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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