Correlation Between Western Asset and Smart Diversification
Can any of the company-specific risk be diversified away by investing in both Western Asset and Smart Diversification 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 Smart Diversification 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 Smart Diversification, you can compare the effects of market volatilities on Western Asset and Smart Diversification 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 Smart Diversification. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Smart Diversification.
Diversification Opportunities for Western Asset and Smart Diversification
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Western and Smart is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Smart Diversification in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smart Diversification 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 Smart Diversification. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smart Diversification has no effect on the direction of Western Asset i.e., Western Asset and Smart Diversification go up and down completely randomly.
Pair Corralation between Western Asset and Smart Diversification
If you would invest 1,205 in Smart Diversification on October 20, 2024 and sell it today you would earn a total of 0.00 from holding Smart Diversification or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 5.26% |
| Values | Daily Returns |
Western Asset Diversified vs. Smart Diversification
Performance |
| Timeline |
| Western Asset Diversified |
| Smart Diversification |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Western Asset and Smart Diversification Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Smart Diversification
The main advantage of trading using opposite Western Asset and Smart Diversification positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Smart Diversification 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 Smart Diversification will offset losses from the drop in Smart Diversification's long position.| Western Asset vs. Morningstar Defensive Bond | Western Asset vs. Doubleline Total Return | Western Asset vs. Gmo High Yield | Western Asset vs. Ambrus Core Bond |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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