Correlation Between Western Asset and Rbc International
Can any of the company-specific risk be diversified away by investing in both Western Asset and Rbc International 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 Rbc International 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 Rbc International Equity, you can compare the effects of market volatilities on Western Asset and Rbc International 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 Rbc International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Rbc International.
Diversification Opportunities for Western Asset and Rbc International
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and Rbc is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Rbc International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc International Equity 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 Rbc International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc International Equity has no effect on the direction of Western Asset i.e., Western Asset and Rbc International go up and down completely randomly.
Pair Corralation between Western Asset and Rbc International
Assuming the 90 days horizon Western Asset Diversified is expected to generate 0.34 times more return on investment than Rbc International. However, Western Asset Diversified is 2.92 times less risky than Rbc International. It trades about -0.35 of its potential returns per unit of risk. Rbc International Equity is currently generating about -0.42 per unit of risk. If you would invest 1,554 in Western Asset Diversified on October 7, 2024 and sell it today you would lose (35.00) from holding Western Asset Diversified or give up 2.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Rbc International Equity
Performance |
| Timeline |
| Western Asset Diversified |
| Rbc International Equity |
Western Asset and Rbc International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Rbc International
The main advantage of trading using opposite Western Asset and Rbc International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Rbc International 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 Rbc International will offset losses from the drop in Rbc International's long position.| Western Asset vs. Multisector Bond Sma | Western Asset vs. Georgia Tax Free Bond | Western Asset vs. Artisan High Income | Western Asset vs. T Rowe Price |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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