Correlation Between Western Asset and Greenville Federal

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

By analyzing existing cross correlation between Western Asset Investment and Greenville Federal Financial, you can compare the effects of market volatilities on Western Asset and Greenville Federal 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 Greenville Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Greenville Federal.

Diversification Opportunities for Western Asset and Greenville Federal

0.26

Correlation Coefficient

Western Asset  Greenville Federal

Modest diversification

The 3 months correlation between Western and Greenville is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Investment and Greenville Federal Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenville Federal 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 Investment are associated (or correlated) with Greenville Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenville Federal has no effect on the direction of Western Asset i.e., Western Asset and Greenville Federal go up and down completely randomly.

Pair Corralation between Western Asset and Greenville Federal

Considering the 90-day investment horizon Western Asset Investment is expected to generate 0.28 times more return on investment than Greenville Federal. However, Western Asset Investment is 3.51 times less risky than Greenville Federal. It trades about 0.02 of its potential returns per unit of risk. Greenville Federal Financial is currently generating about 0.0 per unit of risk. If you would invest  1,551  in Western Asset Investment on October 5, 2024 and sell it today you would earn a total of  85.00  from holding Western Asset Investment or generate 5.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Western Asset Investment  vs.  Greenville Federal Financial

Western Asset Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Western Asset is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Greenville Federal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenville Federal Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Greenville Federal is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Western Asset and Greenville Federal

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

The idea behind Western Asset Investment and Greenville Federal Financial 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.