Correlation Between Ashmore Group and Western Asset

Can any of the company-specific risk be diversified away by investing in both Ashmore Group 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 Ashmore Group and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ashmore Group Plc and Western Asset Managed, you can compare the effects of market volatilities on Ashmore Group 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 Ashmore Group with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ashmore Group and Western Asset.

Diversification Opportunities for Ashmore Group and Western Asset

-0.65

Correlation Coefficient

Ashmore Group  Western Asset

Excellent diversification

The 3 months correlation between Ashmore and Western is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ashmore Group Plc and Western Asset Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Managed and Ashmore Group 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 Ashmore Group Plc 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 Managed has no effect on the direction of Ashmore Group i.e., Ashmore Group and Western Asset go up and down completely randomly.

Pair Corralation between Ashmore Group and Western Asset

Assuming the 90 days horizon Ashmore Group Plc is expected to generate 3.65 times more return on investment than Western Asset. However, Ashmore Group is 3.65 times more volatile than Western Asset Managed. It trades about 0.04 of its potential returns per unit of risk. Western Asset Managed is currently generating about 0.08 per unit of risk. If you would invest  222.00  in Ashmore Group Plc on September 12, 2024 and sell it today you would earn a total of  48.00  from holding Ashmore Group Plc or generate 21.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	71.52%
Values	Daily Returns

Ashmore Group Plc  vs.  Western Asset Managed

Ashmore Group Plc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ashmore Group Plc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ashmore Group reported solid returns over the last few months and may actually be approaching a breakup point.

Western Asset Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of comparatively stable primary indicators, Western Asset is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ashmore Group and Western Asset

The main advantage of trading using opposite Ashmore Group and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ashmore Group 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.

The idea behind Ashmore Group Plc and Western Asset Managed pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..