Correlation Between Alphacentric Symmetry and Western Assets

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

By analyzing existing cross correlation between Alphacentric Symmetry Strategy and Western Assets Emerging, you can compare the effects of market volatilities on Alphacentric Symmetry and Western Assets 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 Alphacentric Symmetry with a short position of Western Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphacentric Symmetry and Western Assets.

Diversification Opportunities for Alphacentric Symmetry and Western Assets

0.21

Correlation Coefficient

Alphacentric Symmetry  Western Assets

Modest diversification

The 3 months correlation between Alphacentric and Western is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Alphacentric Symmetry Strategy and Western Assets Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Assets Emerging and Alphacentric Symmetry 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 Alphacentric Symmetry Strategy are associated (or correlated) with Western Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Assets Emerging has no effect on the direction of Alphacentric Symmetry i.e., Alphacentric Symmetry and Western Assets go up and down completely randomly.

Pair Corralation between Alphacentric Symmetry and Western Assets

Assuming the 90 days horizon Alphacentric Symmetry Strategy is expected to under-perform the Western Assets. In addition to that, Alphacentric Symmetry is 2.0 times more volatile than Western Assets Emerging. It trades about -0.12 of its total potential returns per unit of risk. Western Assets Emerging is currently generating about 0.08 per unit of volatility. If you would invest  1,059  in Western Assets Emerging on December 24, 2024 and sell it today you would earn a total of  14.00  from holding Western Assets Emerging or generate 1.32% return on investment over 90 days.

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

Alphacentric Symmetry Strategy  vs.  Western Assets Emerging

Alphacentric Symmetry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphacentric Symmetry Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Alphacentric Symmetry is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Assets Emerging

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Assets Emerging are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Western Assets is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alphacentric Symmetry and Western Assets

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

The idea behind Alphacentric Symmetry Strategy and Western Assets Emerging 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.