Correlation Between Logan Ridge and Western Asset

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

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

Diversification Opportunities for Logan Ridge and Western Asset

0.43

Correlation Coefficient

Logan Ridge  Western Asset

Very weak diversification

The 3 months correlation between Logan and Western is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance and Western Asset Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Global and Logan Ridge 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 Logan Ridge Finance 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 Global has no effect on the direction of Logan Ridge i.e., Logan Ridge and Western Asset go up and down completely randomly.

Pair Corralation between Logan Ridge and Western Asset

Given the investment horizon of 90 days Logan Ridge Finance is expected to generate 1.91 times more return on investment than Western Asset. However, Logan Ridge is 1.91 times more volatile than Western Asset Global. It trades about 0.04 of its potential returns per unit of risk. Western Asset Global is currently generating about 0.04 per unit of risk. If you would invest  2,071  in Logan Ridge Finance on December 2, 2024 and sell it today you would earn a total of  424.00  from holding Logan Ridge Finance or generate 20.47% return on investment over 90 days.

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

Logan Ridge Finance  vs.  Western Asset Global

Logan Ridge Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Logan Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Logan Ridge is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Western Asset Global

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Global are ranked lower than 1 (%) 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.

Pair Trading with Logan Ridge and Western Asset

The main advantage of trading using opposite Logan Ridge and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logan Ridge 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 Logan Ridge Finance and Western Asset Global 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.