Correlation Between Cohen Steers and Western Asset

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

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

Diversification Opportunities for Cohen Steers and Western Asset

-0.05

Correlation Coefficient

Cohen Steers  Western Asset

Good diversification

The 3 months correlation between Cohen and Western is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cohen Steers Closed 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 Cohen Steers 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 Cohen Steers Closed 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 Cohen Steers i.e., Cohen Steers and Western Asset go up and down completely randomly.

Pair Corralation between Cohen Steers and Western Asset

Considering the 90-day investment horizon Cohen Steers Closed is expected to under-perform the Western Asset. In addition to that, Cohen Steers is 1.74 times more volatile than Western Asset High. It trades about -0.05 of its total potential returns per unit of risk. Western Asset High is currently generating about 0.15 per unit of volatility. If you would invest  1,147  in Western Asset High on December 27, 2024 and sell it today you would earn a total of  45.00  from holding Western Asset High or generate 3.92% return on investment over 90 days.

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

Cohen Steers Closed  vs.  Western Asset High

Cohen Steers Closed

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cohen Steers Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable basic indicators, Cohen Steers is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Western Asset High

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset High are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Western Asset is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cohen Steers and Western Asset

The main advantage of trading using opposite Cohen Steers and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohen Steers 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 Cohen Steers Closed 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.