Correlation Between Western Assets and Siit Emerging
Can any of the company-specific risk be diversified away by investing in both Western Assets and Siit Emerging 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 Siit Emerging 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 Siit Emerging Markets, you can compare the effects of market volatilities on Western Assets and Siit Emerging 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 Siit Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Siit Emerging.
Diversification Opportunities for Western Assets and Siit Emerging
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Siit is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Siit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Emerging Markets 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 Siit Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Emerging Markets has no effect on the direction of Western Assets i.e., Western Assets and Siit Emerging go up and down completely randomly.
Pair Corralation between Western Assets and Siit Emerging
Assuming the 90 days horizon Western Assets is expected to generate 1.1 times less return on investment than Siit Emerging. But when comparing it to its historical volatility, Western Assets Emerging is 1.8 times less risky than Siit Emerging. It trades about 0.1 of its potential returns per unit of risk. Siit Emerging Markets is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 810.00 in Siit Emerging Markets on August 24, 2024 and sell it today you would earn a total of 190.00 from holding Siit Emerging Markets or generate 23.46% 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. Siit Emerging Markets
Performance |
| Timeline |
| Western Assets Emerging |
| Siit Emerging Markets |
Western Assets and Siit Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Siit Emerging
The main advantage of trading using opposite Western Assets and Siit Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Siit Emerging 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 Siit Emerging will offset losses from the drop in Siit Emerging'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 |
| Siit Emerging vs. Vanguard Emerging Markets | Siit Emerging vs. Vanguard Emerging Markets | Siit Emerging vs. Vanguard Emerging Markets | Siit Emerging vs. American Funds New |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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