Correlation Between Western Asset and Sit Large
Can any of the company-specific risk be diversified away by investing in both Western Asset and Sit 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 Sit 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 Sit Large Cap, you can compare the effects of market volatilities on Western Asset and Sit 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 Sit Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Sit Large.
Diversification Opportunities for Western Asset and Sit Large
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Sit is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Municipal and Sit Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sit 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 Sit Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sit Large Cap has no effect on the direction of Western Asset i.e., Western Asset and Sit Large go up and down completely randomly.
Pair Corralation between Western Asset and Sit Large
Assuming the 90 days horizon Western Asset is expected to generate 26.69 times less return on investment than Sit Large. But when comparing it to its historical volatility, Western Asset Municipal is 3.43 times less risky than Sit Large. It trades about 0.01 of its potential returns per unit of risk. Sit Large Cap is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,930 in Sit Large Cap on September 12, 2024 and sell it today you would earn a total of 2,174 from holding Sit Large Cap or generate 36.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Municipal vs. Sit Large Cap
Performance |
| Timeline |
| Western Asset Municipal |
| Sit Large Cap |
Western Asset and Sit Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Sit Large
The main advantage of trading using opposite Western Asset and Sit Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Sit 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 Sit Large will offset losses from the drop in Sit Large's long position.| Western Asset vs. Barings Active Short | Western Asset vs. Cmg Ultra Short | Western Asset vs. Blackrock Short Term Inflat Protected | Western Asset vs. Rbc Short Duration |
| Sit Large vs. Western Asset Municipal | Sit Large vs. Arrow Managed Futures | Sit Large vs. Ab Value Fund | Sit Large vs. Materials Portfolio Fidelity |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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