Correlation Between Western Asset and Cullen Emerging
Can any of the company-specific risk be diversified away by investing in both Western Asset and Cullen 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 Asset and Cullen Emerging 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 Cullen Emerging Markets, you can compare the effects of market volatilities on Western Asset and Cullen 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 Asset with a short position of Cullen Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Cullen Emerging.
Diversification Opportunities for Western Asset and Cullen Emerging
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Cullen is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Cullen Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cullen Emerging Markets 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 Cullen Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cullen Emerging Markets has no effect on the direction of Western Asset i.e., Western Asset and Cullen Emerging go up and down completely randomly.
Pair Corralation between Western Asset and Cullen Emerging
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Cullen Emerging. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 3.1 times less risky than Cullen Emerging. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Cullen Emerging Markets is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,232 in Cullen Emerging Markets on September 3, 2024 and sell it today you would lose (4.00) from holding Cullen Emerging Markets or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Cullen Emerging Markets
Performance |
| Timeline |
| Western Asset Diversified |
| Cullen Emerging Markets |
Western Asset and Cullen Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Cullen Emerging
The main advantage of trading using opposite Western Asset and Cullen Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Cullen 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 Cullen Emerging will offset losses from the drop in Cullen Emerging'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 |
| Cullen Emerging vs. Franklin Mutual Global | Cullen Emerging vs. Templeton Growth Fund | Cullen Emerging vs. Franklin Real Estate | Cullen Emerging vs. HUMANA INC |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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