Correlation Between Swiss Helvetia and Western Asset

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

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

Diversification Opportunities for Swiss Helvetia and Western Asset

0.02

Correlation Coefficient

Swiss Helvetia  Western Asset

Significant diversification

The 3 months correlation between Swiss and Western is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Swiss Helvetia 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 Swiss Helvetia 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 Swiss Helvetia 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 Swiss Helvetia i.e., Swiss Helvetia and Western Asset go up and down completely randomly.

Pair Corralation between Swiss Helvetia and Western Asset

Considering the 90-day investment horizon Swiss Helvetia Closed is expected to under-perform the Western Asset. In addition to that, Swiss Helvetia is 1.45 times more volatile than Western Asset High. It trades about -0.19 of its total potential returns per unit of risk. Western Asset High is currently generating about 0.08 per unit of volatility. If you would invest  1,175  in Western Asset High on September 4, 2024 and sell it today you would earn a total of  35.00  from holding Western Asset High or generate 2.98% return on investment over 90 days.

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

Swiss Helvetia Closed  vs.  Western Asset High

Swiss Helvetia Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Swiss Helvetia Closed has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest uncertain performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Western Asset High

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset High are ranked lower than 6 (%) 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 Swiss Helvetia and Western Asset

The main advantage of trading using opposite Swiss Helvetia and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swiss Helvetia 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 Swiss Helvetia 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.