Correlation Between Auburn Bancorp and Western Asset
Can any of the company-specific risk be diversified away by investing in both Auburn Bancorp 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 Auburn Bancorp and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auburn Bancorp and Western Asset Global, you can compare the effects of market volatilities on Auburn Bancorp 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 Auburn Bancorp with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auburn Bancorp and Western Asset.
Diversification Opportunities for Auburn Bancorp and Western Asset
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Auburn and Western is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Auburn Bancorp and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global and Auburn Bancorp 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 Auburn Bancorp 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 Global has no effect on the direction of Auburn Bancorp i.e., Auburn Bancorp and Western Asset go up and down completely randomly.
Pair Corralation between Auburn Bancorp and Western Asset
Given the investment horizon of 90 days Auburn Bancorp is expected to generate 3.78 times less return on investment than Western Asset. In addition to that, Auburn Bancorp is 4.51 times more volatile than Western Asset Global. It trades about 0.01 of its total potential returns per unit of risk. Western Asset Global is currently generating about 0.2 per unit of volatility. If you would invest 1,080 in Western Asset Global on December 28, 2024 and sell it today you would earn a total of 67.00 from holding Western Asset Global or generate 6.2% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Auburn Bancorp vs. Western Asset Global
Performance |
Timeline |
Auburn Bancorp |
Western Asset Global |
Auburn Bancorp and Western Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Auburn Bancorp and Western Asset
The main advantage of trading using opposite Auburn Bancorp and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auburn Bancorp 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.Auburn Bancorp vs. Target Global Acquisition | Auburn Bancorp vs. Via Renewables | Auburn Bancorp vs. Investment Managers Series | Auburn Bancorp vs. US810186AW67 |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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