Correlation Between Western Asset and Inverse Government
Can any of the company-specific risk be diversified away by investing in both Western Asset and Inverse Government 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 Inverse Government 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 Inverse Government Long, you can compare the effects of market volatilities on Western Asset and Inverse Government 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 Inverse Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Inverse Government.
Diversification Opportunities for Western Asset and Inverse Government
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Inverse is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Inverse Government Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Government Long 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 Inverse Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Government Long has no effect on the direction of Western Asset i.e., Western Asset and Inverse Government go up and down completely randomly.
Pair Corralation between Western Asset and Inverse Government
Assuming the 90 days horizon Western Asset Diversified is expected to under-perform the Inverse Government. But the mutual fund apears to be less risky and, when comparing its historical volatility, Western Asset Diversified is 4.3 times less risky than Inverse Government. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Inverse Government Long is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 19,226 in Inverse Government Long on August 29, 2024 and sell it today you would earn a total of 300.00 from holding Inverse Government Long or generate 1.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Western Asset Diversified vs. Inverse Government Long
Performance |
| Timeline |
| Western Asset Diversified |
| Inverse Government Long |
Western Asset and Inverse Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Inverse Government
The main advantage of trading using opposite Western Asset and Inverse Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Inverse Government 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 Inverse Government will offset losses from the drop in Inverse Government'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 |
| Inverse Government vs. Volumetric Fund Volumetric | Inverse Government vs. Ips Strategic Capital | Inverse Government vs. T Rowe Price | Inverse Government vs. Eic Value Fund |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |