Correlation Between Western Assets and Summit Global
Can any of the company-specific risk be diversified away by investing in both Western Assets and Summit Global 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 Summit Global 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 Summit Global Investments, you can compare the effects of market volatilities on Western Assets and Summit Global 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 Summit Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Summit Global.
Diversification Opportunities for Western Assets and Summit Global
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Summit is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Summit Global Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Global Investments 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 Summit Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Global Investments has no effect on the direction of Western Assets i.e., Western Assets and Summit Global go up and down completely randomly.
Pair Corralation between Western Assets and Summit Global
Assuming the 90 days horizon Western Assets is expected to generate 1.16 times less return on investment than Summit Global. But when comparing it to its historical volatility, Western Assets Emerging is 1.36 times less risky than Summit Global. It trades about 0.1 of its potential returns per unit of risk. Summit Global Investments is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,231 in Summit Global Investments on September 4, 2024 and sell it today you would earn a total of 810.00 from holding Summit Global Investments or generate 25.07% 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. Summit Global Investments
Performance |
| Timeline |
| Western Assets Emerging |
| Summit Global Investments |
Western Assets and Summit Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Summit Global
The main advantage of trading using opposite Western Assets and Summit Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Summit Global 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 Summit Global will offset losses from the drop in Summit Global's long position.| Western Assets vs. Heartland Value Plus | Western Assets vs. Royce Opportunity Fund | Western Assets vs. Royce Opportunity Fund | Western Assets vs. Queens Road Small |
| Summit Global vs. Artisan Emerging Markets | Summit Global vs. Western Assets Emerging | Summit Global vs. Templeton Developing Markets | Summit Global vs. Locorr Market Trend |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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