Correlation Between Western Asset and Grandeur Peak
Can any of the company-specific risk be diversified away by investing in both Western Asset and Grandeur Peak 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 Grandeur Peak 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 Grandeur Peak International, you can compare the effects of market volatilities on Western Asset and Grandeur Peak 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 Grandeur Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Grandeur Peak.
Diversification Opportunities for Western Asset and Grandeur Peak
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Grandeur is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Grandeur Peak International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grandeur Peak Intern 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 Grandeur Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grandeur Peak Intern has no effect on the direction of Western Asset i.e., Western Asset and Grandeur Peak go up and down completely randomly.
Pair Corralation between Western Asset and Grandeur Peak
Assuming the 90 days horizon Western Asset Diversified is expected to generate 0.39 times more return on investment than Grandeur Peak. However, Western Asset Diversified is 2.55 times less risky than Grandeur Peak. It trades about 0.01 of its potential returns per unit of risk. Grandeur Peak International is currently generating about -0.03 per unit of risk. If you would invest 1,549 in Western Asset Diversified on September 14, 2024 and sell it today you would earn a total of 5.00 from holding Western Asset Diversified or generate 0.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Grandeur Peak International
Performance |
| Timeline |
| Western Asset Diversified |
| Grandeur Peak Intern |
Western Asset and Grandeur Peak Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Grandeur Peak
The main advantage of trading using opposite Western Asset and Grandeur Peak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Grandeur Peak 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 Grandeur Peak will offset losses from the drop in Grandeur Peak'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 |
| Grandeur Peak vs. Simt Real Estate | Grandeur Peak vs. Short Real Estate | Grandeur Peak vs. Columbia Real Estate | Grandeur Peak vs. Forum Real Estate |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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