Correlation Between Western Assets and Inverse High
Can any of the company-specific risk be diversified away by investing in both Western Assets and Inverse 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 Inverse 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 Inverse High Yield, you can compare the effects of market volatilities on Western Assets and Inverse 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 Inverse High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Inverse High.
Diversification Opportunities for Western Assets and Inverse High
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Inverse is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Inverse High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse 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 Inverse High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse High Yield has no effect on the direction of Western Assets i.e., Western Assets and Inverse High go up and down completely randomly.
Pair Corralation between Western Assets and Inverse High
Assuming the 90 days horizon Western Assets Emerging is expected to generate 1.26 times more return on investment than Inverse High. However, Western Assets is 1.26 times more volatile than Inverse High Yield. It trades about 0.08 of its potential returns per unit of risk. Inverse High Yield is currently generating about 0.03 per unit of risk. If you would invest 1,072 in Western Assets Emerging on September 12, 2024 and sell it today you would earn a total of 17.00 from holding Western Assets Emerging or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Inverse High Yield
Performance |
| Timeline |
| Western Assets Emerging |
| Inverse High Yield |
Western Assets and Inverse High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Inverse High
The main advantage of trading using opposite Western Assets and Inverse High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Inverse 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 Inverse High will offset losses from the drop in Inverse High's long position.| Western Assets vs. Ftfa Franklin Templeton Growth | Western Assets vs. Smallcap Growth Fund | Western Assets vs. T Rowe Price | Western Assets vs. Champlain Mid Cap |
| Inverse High vs. Hsbc Government Money | Inverse High vs. Franklin Adjustable Government | Inverse High vs. Aig Government Money | Inverse High vs. Inverse Government Long |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Transaction History View history of all your transactions and understand their impact on performance |