Correlation Between Investment and Western Asset
Can any of the company-specific risk be diversified away by investing in both Investment 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 Investment and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment Of America and Western Asset Inflation, you can compare the effects of market volatilities on Investment 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 Investment with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Western Asset.
Diversification Opportunities for Investment and Western Asset
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Investment and Western is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Investment Of America and Western Asset Inflation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Inflation and Investment 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 Investment Of America 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 Inflation has no effect on the direction of Investment i.e., Investment and Western Asset go up and down completely randomly.
Pair Corralation between Investment and Western Asset
Assuming the 90 days horizon Investment Of America is expected to under-perform the Western Asset. In addition to that, Investment is 7.91 times more volatile than Western Asset Inflation. It trades about -0.18 of its total potential returns per unit of risk. Western Asset Inflation is currently generating about -0.43 per unit of volatility. If you would invest 938.00 in Western Asset Inflation on September 24, 2024 and sell it today you would lose (20.00) from holding Western Asset Inflation or give up 2.13% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Investment Of America vs. Western Asset Inflation
Performance |
Timeline |
Investment Of America |
Western Asset Inflation |
Investment and Western Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Investment and Western Asset
The main advantage of trading using opposite Investment and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment 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.Investment vs. Western Asset Inflation | Investment vs. Deutsche Global Inflation | Investment vs. Goldman Sachs Inflation | Investment vs. Guidepath Managed Futures |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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