Correlation Between Western Asset and Invesco High
Can any of the company-specific risk be diversified away by investing in both Western Asset and Invesco High 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 Invesco High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Invesco High Yield, you can compare the effects of market volatilities on Western Asset and Invesco High 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 Invesco High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Invesco High.
Diversification Opportunities for Western Asset and Invesco High
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Western and Invesco is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Invesco High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco High Yield 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 Diversified are associated (or correlated) with Invesco High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco High Yield has no effect on the direction of Western Asset i.e., Western Asset and Invesco High go up and down completely randomly.
Pair Corralation between Western Asset and Invesco High
Assuming the 90 days horizon Western Asset is expected to generate 10.29 times less return on investment than Invesco High. In addition to that, Western Asset is 1.07 times more volatile than Invesco High Yield. It trades about 0.01 of its total potential returns per unit of risk. Invesco High Yield is currently generating about 0.1 per unit of volatility. If you would invest 813.00 in Invesco High Yield on September 12, 2024 and sell it today you would earn a total of 59.00 from holding Invesco High Yield or generate 7.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Invesco High Yield
Performance |
| Timeline |
| Western Asset Diversified |
| Invesco High Yield |
Western Asset and Invesco High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Invesco High
The main advantage of trading using opposite Western Asset and Invesco High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Invesco High 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 Invesco High will offset losses from the drop in Invesco High's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Invesco High vs. Western Asset Diversified | Invesco High vs. Aqr Long Short Equity | Invesco High vs. Transamerica Emerging Markets | Invesco High vs. Artisan Emerging Markets |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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