Correlation Between Western Asset and Qs Sp
Can any of the company-specific risk be diversified away by investing in both Western Asset and Qs Sp 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 Qs Sp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset E and Qs Sp 500, you can compare the effects of market volatilities on Western Asset and Qs Sp 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 Qs Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Qs Sp.
Diversification Opportunities for Western Asset and Qs Sp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and SBSDX is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset E and Qs Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qs Sp 500 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 E are associated (or correlated) with Qs Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qs Sp 500 has no effect on the direction of Western Asset i.e., Western Asset and Qs Sp go up and down completely randomly.
Pair Corralation between Western Asset and Qs Sp
Assuming the 90 days horizon Western Asset E is expected to generate 0.32 times more return on investment than Qs Sp. However, Western Asset E is 3.15 times less risky than Qs Sp. It trades about 0.14 of its potential returns per unit of risk. Qs Sp 500 is currently generating about -0.08 per unit of risk. If you would invest 898.00 in Western Asset E on December 28, 2024 and sell it today you would earn a total of 25.00 from holding Western Asset E or generate 2.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Western Asset E vs. Qs Sp 500
Performance |
Timeline |
Western Asset E |
Qs Sp 500 |
Western Asset and Qs Sp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Asset and Qs Sp
The main advantage of trading using opposite Western Asset and Qs Sp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Qs Sp 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 Qs Sp will offset losses from the drop in Qs Sp's long position.Western Asset vs. Arrow Managed Futures | Western Asset vs. Ab Bond Inflation | Western Asset vs. Vanguard Inflation Protected Securities | Western Asset vs. Inflation Linked Fixed Income |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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