Correlation Between Western Asset and Guidemark Large
Can any of the company-specific risk be diversified away by investing in both Western Asset and Guidemark Large 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 Asset and Guidemark Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Municipal and Guidemark Large Cap, you can compare the effects of market volatilities on Western Asset and Guidemark Large 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 Asset with a short position of Guidemark Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Guidemark Large.
Diversification Opportunities for Western Asset and Guidemark Large
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Guidemark is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Guidemark Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidemark Large Cap and Western Asset 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 Asset Municipal are associated (or correlated) with Guidemark Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidemark Large Cap has no effect on the direction of Western Asset i.e., Western Asset and Guidemark Large go up and down completely randomly.
Pair Corralation between Western Asset and Guidemark Large
Assuming the 90 days horizon Western Asset Municipal is expected to generate 0.47 times more return on investment than Guidemark Large. However, Western Asset Municipal is 2.14 times less risky than Guidemark Large. It trades about 0.11 of its potential returns per unit of risk. Guidemark Large Cap is currently generating about -0.11 per unit of risk. If you would invest 725.00 in Western Asset Municipal on September 4, 2024 and sell it today you would earn a total of 6.00 from holding Western Asset Municipal or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Western Asset Municipal vs. Guidemark Large Cap
Performance |
| Timeline |
| Western Asset Municipal |
| Guidemark Large Cap |
Western Asset and Guidemark Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Guidemark Large
The main advantage of trading using opposite Western Asset and Guidemark Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Guidemark Large 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 Guidemark Large will offset losses from the drop in Guidemark Large's long position.| Western Asset vs. Icon Natural Resources | Western Asset vs. Invesco Energy Fund | Western Asset vs. Dreyfus Natural Resources | Western Asset vs. Gmo Resources |
| Guidemark Large vs. Western Asset Municipal | Guidemark Large vs. Scharf Global Opportunity | Guidemark Large vs. Bbh Intermediate Municipal | Guidemark Large vs. Iaadx |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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