Correlation Between Western Asset and Avidbank Holdings

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

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

Diversification Opportunities for Western Asset and Avidbank Holdings

0.49

Correlation Coefficient

Western Asset  Avidbank Holdings

Very weak diversification

The 3 months correlation between Western and Avidbank is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Avidbank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avidbank Holdings and Western Asset 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 Western Asset Global are associated (or correlated) with Avidbank Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avidbank Holdings has no effect on the direction of Western Asset i.e., Western Asset and Avidbank Holdings go up and down completely randomly.

Pair Corralation between Western Asset and Avidbank Holdings

Considering the 90-day investment horizon Western Asset Global is expected to generate 0.27 times more return on investment than Avidbank Holdings. However, Western Asset Global is 3.64 times less risky than Avidbank Holdings. It trades about 0.18 of its potential returns per unit of risk. Avidbank Holdings is currently generating about 0.04 per unit of risk. If you would invest  1,080  in Western Asset Global on December 29, 2024 and sell it today you would earn a total of  63.00  from holding Western Asset Global or generate 5.83% return on investment over 90 days.

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

Western Asset Global  vs.  Avidbank Holdings

Western Asset Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Global are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Western Asset is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Avidbank Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avidbank Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, Avidbank Holdings is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Western Asset and Avidbank Holdings

The main advantage of trading using opposite Western Asset and Avidbank Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Avidbank Holdings 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 Avidbank Holdings will offset losses from the drop in Avidbank Holdings' long position.

The idea behind Western Asset Global and Avidbank Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.