Correlation Between Equinox Campbell and Western Asset

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

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

Diversification Opportunities for Equinox Campbell and Western Asset

-0.1

Correlation Coefficient

Equinox Campbell  Western Asset

Good diversification

The 3 months correlation between Equinox and Western is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Equinox Campbell Strategy and Western Asset High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset High and Equinox Campbell 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 Equinox Campbell Strategy 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 High has no effect on the direction of Equinox Campbell i.e., Equinox Campbell and Western Asset go up and down completely randomly.

Pair Corralation between Equinox Campbell and Western Asset

Assuming the 90 days horizon Equinox Campbell is expected to generate 3.34 times less return on investment than Western Asset. In addition to that, Equinox Campbell is 1.87 times more volatile than Western Asset High. It trades about 0.02 of its total potential returns per unit of risk. Western Asset High is currently generating about 0.11 per unit of volatility. If you would invest  584.00  in Western Asset High on September 24, 2024 and sell it today you would earn a total of  115.00  from holding Western Asset High or generate 19.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Equinox Campbell Strategy  vs.  Western Asset High

Equinox Campbell Strategy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equinox Campbell Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Equinox Campbell is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Asset High

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset High has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Western Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Equinox Campbell and Western Asset

The main advantage of trading using opposite Equinox Campbell and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equinox Campbell 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 Equinox Campbell Strategy and Western Asset High 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.