Correlation Between Western Asset and Quantitative
Can any of the company-specific risk be diversified away by investing in both Western Asset and Quantitative 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 Quantitative 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 Quantitative U S, you can compare the effects of market volatilities on Western Asset and Quantitative 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 Quantitative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Quantitative.
Diversification Opportunities for Western Asset and Quantitative
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Quantitative is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Quantitative U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantitative U S 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 Quantitative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantitative U S has no effect on the direction of Western Asset i.e., Western Asset and Quantitative go up and down completely randomly.
Pair Corralation between Western Asset and Quantitative
Assuming the 90 days horizon Western Asset is expected to generate 8.38 times less return on investment than Quantitative. But when comparing it to its historical volatility, Western Asset Diversified is 2.24 times less risky than Quantitative. It trades about 0.02 of its potential returns per unit of risk. Quantitative U S is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,178 in Quantitative U S on August 24, 2024 and sell it today you would earn a total of 278.00 from holding Quantitative U S or generate 23.6% 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 Diversified vs. Quantitative U S
Performance |
| Timeline |
| Western Asset Diversified |
| Quantitative U S |
Western Asset and Quantitative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Quantitative
The main advantage of trading using opposite Western Asset and Quantitative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Quantitative 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 Quantitative will offset losses from the drop in Quantitative's long position.| Western Asset vs. Dreyfusstandish Global Fixed | Western Asset vs. Ms Global Fixed | Western Asset vs. Us Vector Equity | Western Asset vs. Small Cap Equity |
| Quantitative vs. Tiaa Cref Lifestyle Conservative | Quantitative vs. Pioneer Diversified High | Quantitative vs. American Funds Conservative | Quantitative vs. Western Asset Diversified |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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