Correlation Between Western Assets and Upright Assets
Can any of the company-specific risk be diversified away by investing in both Western Assets and Upright Assets 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 Upright Assets 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 Upright Assets Allocation, you can compare the effects of market volatilities on Western Assets and Upright Assets 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 Upright Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Upright Assets.
Diversification Opportunities for Western Assets and Upright Assets
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and Upright is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Upright Assets Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upright Assets Allocation 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 Upright Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upright Assets Allocation has no effect on the direction of Western Assets i.e., Western Assets and Upright Assets go up and down completely randomly.
Pair Corralation between Western Assets and Upright Assets
Assuming the 90 days horizon Western Assets is expected to generate 3.79 times less return on investment than Upright Assets. But when comparing it to its historical volatility, Western Assets Emerging is 6.24 times less risky than Upright Assets. It trades about 0.11 of its potential returns per unit of risk. Upright Assets Allocation is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,368 in Upright Assets Allocation on October 30, 2024 and sell it today you would earn a total of 244.00 from holding Upright Assets Allocation or generate 17.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Assets Emerging vs. Upright Assets Allocation
Performance |
| Timeline |
| Western Assets Emerging |
| Upright Assets Allocation |
Western Assets and Upright Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Upright Assets
The main advantage of trading using opposite Western Assets and Upright Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Upright Assets 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 Upright Assets will offset losses from the drop in Upright Assets' long position.| Western Assets vs. Transamerica Intermediate Muni | Western Assets vs. Intermediate Term Tax Free Bond | Western Assets vs. Nuveen Strategic Municipal | Western Assets vs. Ab Municipal Bond |
| Upright Assets vs. Millerhoward High Income | Upright Assets vs. Aqr Risk Parity | Upright Assets vs. Prudential High Yield | Upright Assets vs. Needham Aggressive Growth |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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