Correlation Between Investec Global and Western Asset
Can any of the company-specific risk be diversified away by investing in both Investec Global and Western Asset 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 Investec Global and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Global Franchise and Western Asset Short Term, you can compare the effects of market volatilities on Investec Global and Western Asset 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 Investec Global with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Global and Western Asset.
Diversification Opportunities for Investec Global and Western Asset
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Investec and Western is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Investec Global Franchise and Western Asset Short Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Short and Investec Global 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 Investec Global Franchise are associated (or correlated) with Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Short has no effect on the direction of Investec Global i.e., Investec Global and Western Asset go up and down completely randomly.
Pair Corralation between Investec Global and Western Asset
Assuming the 90 days horizon Investec Global Franchise is expected to generate 3.92 times more return on investment than Western Asset. However, Investec Global is 3.92 times more volatile than Western Asset Short Term. It trades about 0.07 of its potential returns per unit of risk. Western Asset Short Term is currently generating about 0.12 per unit of risk. If you would invest 1,620 in Investec Global Franchise on September 12, 2024 and sell it today you would earn a total of 199.00 from holding Investec Global Franchise or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec Global Franchise vs. Western Asset Short Term
Performance |
| Timeline |
| Investec Global Franchise |
| Western Asset Short |
Investec Global and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec Global and Western Asset
The main advantage of trading using opposite Investec Global and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Global position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Investec Global vs. Pace Smallmedium Value | Investec Global vs. Kinetics Small Cap | Investec Global vs. Touchstone Small Cap | Investec Global vs. Ab Small Cap |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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