Correlation Between Western Assets and Transamerica Emerging
Can any of the company-specific risk be diversified away by investing in both Western Assets and Transamerica 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 Transamerica 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 Transamerica Emerging Markets, you can compare the effects of market volatilities on Western Assets and Transamerica 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 Transamerica Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Transamerica Emerging.
Diversification Opportunities for Western Assets and Transamerica Emerging
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Transamerica is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Transamerica Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Emerging 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 Transamerica Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Emerging has no effect on the direction of Western Assets i.e., Western Assets and Transamerica Emerging go up and down completely randomly.
Pair Corralation between Western Assets and Transamerica Emerging
Assuming the 90 days horizon Western Assets Emerging is expected to generate 0.51 times more return on investment than Transamerica Emerging. However, Western Assets Emerging is 1.95 times less risky than Transamerica Emerging. It trades about -0.33 of its potential returns per unit of risk. Transamerica Emerging Markets is currently generating about -0.17 per unit of risk. If you would invest 1,086 in Western Assets Emerging on October 13, 2024 and sell it today you would lose (23.00) from holding Western Assets Emerging or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Transamerica Emerging Markets
Performance |
| Timeline |
| Western Assets Emerging |
| Transamerica Emerging |
Western Assets and Transamerica Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Transamerica Emerging
The main advantage of trading using opposite Western Assets and Transamerica Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Transamerica 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 Transamerica Emerging will offset losses from the drop in Transamerica 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 |
| Transamerica Emerging vs. Dow 2x Strategy | Transamerica Emerging vs. Western Assets Emerging | Transamerica Emerging vs. Nasdaq 100 2x Strategy | Transamerica Emerging vs. Nasdaq 100 2x Strategy |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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