Correlation Between Western Asset and Retirement Living
Can any of the company-specific risk be diversified away by investing in both Western Asset and Retirement Living 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 Retirement Living 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 Retirement Living Through, you can compare the effects of market volatilities on Western Asset and Retirement Living 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 Retirement Living. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Retirement Living.
Diversification Opportunities for Western Asset and Retirement Living
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Retirement is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Retirement Living Through in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retirement Living Through 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 Retirement Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retirement Living Through has no effect on the direction of Western Asset i.e., Western Asset and Retirement Living go up and down completely randomly.
Pair Corralation between Western Asset and Retirement Living
Assuming the 90 days horizon Western Asset is expected to generate 6.87 times less return on investment than Retirement Living. But when comparing it to its historical volatility, Western Asset Diversified is 2.25 times less risky than Retirement Living. It trades about 0.05 of its potential returns per unit of risk. Retirement Living Through is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,458 in Retirement Living Through on August 31, 2024 and sell it today you would earn a total of 33.00 from holding Retirement Living Through or generate 2.26% 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. Retirement Living Through
Performance |
| Timeline |
| Western Asset Diversified |
| Retirement Living Through |
Western Asset and Retirement Living Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Retirement Living
The main advantage of trading using opposite Western Asset and Retirement Living positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Retirement Living 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 Retirement Living will offset losses from the drop in Retirement Living's long position.| Western Asset vs. Davis Financial Fund | Western Asset vs. Prudential Jennison Financial | Western Asset vs. Mesirow Financial Small | Western Asset vs. Fidelity Advisor Financial |
| Retirement Living vs. Western Asset Diversified | Retirement Living vs. Aqr Diversified Arbitrage | Retirement Living vs. Harbor Diversified International | Retirement Living vs. Fidelity Advisor 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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