Correlation Between Western Asset and Quantified Market
Can any of the company-specific risk be diversified away by investing in both Western Asset and Quantified Market 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 Quantified Market 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 Quantified Market Leaders, you can compare the effects of market volatilities on Western Asset and Quantified Market 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 Quantified Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Quantified Market.
Diversification Opportunities for Western Asset and Quantified Market
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Quantified is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Quantified Market Leaders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantified Market Leaders 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 Quantified Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantified Market Leaders has no effect on the direction of Western Asset i.e., Western Asset and Quantified Market go up and down completely randomly.
Pair Corralation between Western Asset and Quantified Market
Assuming the 90 days horizon Western Asset is expected to generate 14.45 times less return on investment than Quantified Market. But when comparing it to its historical volatility, Western Asset Diversified is 3.25 times less risky than Quantified Market. It trades about 0.01 of its potential returns per unit of risk. Quantified Market Leaders is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 917.00 in Quantified Market Leaders on August 28, 2024 and sell it today you would earn a total of 279.00 from holding Quantified Market Leaders or generate 30.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Quantified Market Leaders
Performance |
| Timeline |
| Western Asset Diversified |
| Quantified Market Leaders |
Western Asset and Quantified Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Quantified Market
The main advantage of trading using opposite Western Asset and Quantified Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Quantified Market 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 Quantified Market will offset losses from the drop in Quantified Market's long position.| Western Asset vs. Ab All Market | Western Asset vs. Pnc Emerging Markets | Western Asset vs. T Rowe Price | Western Asset vs. Shelton Emerging Markets |
| Quantified Market vs. Quantitative Longshort Equity | Quantified Market vs. Locorr Longshort Modities | Quantified Market vs. Old Westbury Short Term | Quantified Market vs. Ultra Short Term Fixed |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |