Correlation Between Western Assets and Ep Emerging
Can any of the company-specific risk be diversified away by investing in both Western Assets and Ep 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 Ep Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Assets Municipal and Ep Emerging Markets, you can compare the effects of market volatilities on Western Assets and Ep 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 Ep Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Assets and Ep Emerging.
Diversification Opportunities for Western Assets and Ep Emerging
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and EPASX is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Municipal and Ep Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ep 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 Municipal are associated (or correlated) with Ep Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ep Emerging Markets has no effect on the direction of Western Assets i.e., Western Assets and Ep Emerging go up and down completely randomly.
Pair Corralation between Western Assets and Ep Emerging
Assuming the 90 days horizon Western Assets is expected to generate 4.28 times less return on investment than Ep Emerging. But when comparing it to its historical volatility, Western Assets Municipal is 1.95 times less risky than Ep Emerging. It trades about 0.01 of its potential returns per unit of risk. Ep Emerging Markets is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 912.00 in Ep Emerging Markets on September 1, 2024 and sell it today you would earn a total of 79.00 from holding Ep Emerging Markets or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 30.91% |
| Values | Daily Returns |
Western Assets Municipal vs. Ep Emerging Markets
Performance |
| Timeline |
| Western Assets Municipal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ep Emerging Markets |
Western Assets and Ep Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Assets and Ep Emerging
The main advantage of trading using opposite Western Assets and Ep Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Assets position performs unexpectedly, Ep 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 Ep Emerging will offset losses from the drop in Ep Emerging's long position.| Western Assets vs. Ep Emerging Markets | Western Assets vs. Goldman Sachs Emerging | Western Assets vs. Investec Emerging Markets | Western Assets vs. Artisan Emerging Markets |
| Ep Emerging vs. Us Strategic Equity | Ep Emerging vs. Ultra Short Fixed Income | Ep Emerging vs. Cutler Equity | Ep Emerging vs. Huber Capital Equity |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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