Correlation Between Wellington Shields and Western Asset
Can any of the company-specific risk be diversified away by investing in both Wellington Shields 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 Wellington Shields and Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wellington Shields All Cap and Western Asset Diversified, you can compare the effects of market volatilities on Wellington Shields 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 Wellington Shields with a short position of Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wellington Shields and Western Asset.
Diversification Opportunities for Wellington Shields and Western Asset
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wellington and Western is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Wellington Shields All Cap and Western Asset Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Diversified and Wellington Shields 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 Wellington Shields All Cap 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 Diversified has no effect on the direction of Wellington Shields i.e., Wellington Shields and Western Asset go up and down completely randomly.
Pair Corralation between Wellington Shields and Western Asset
Assuming the 90 days horizon Wellington Shields All Cap is expected to under-perform the Western Asset. In addition to that, Wellington Shields is 4.23 times more volatile than Western Asset Diversified. It trades about -0.11 of its total potential returns per unit of risk. Western Asset Diversified is currently generating about -0.02 per unit of volatility. If you would invest 1,535 in Western Asset Diversified on December 2, 2024 and sell it today you would lose (6.00) from holding Western Asset Diversified or give up 0.39% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Wellington Shields All Cap vs. Western Asset Diversified
Performance |
Timeline |
Wellington Shields All |
Western Asset Diversified |
Wellington Shields and Western Asset Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wellington Shields and Western Asset
The main advantage of trading using opposite Wellington Shields and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wellington Shields 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.Wellington Shields vs. Transamerica Emerging Markets | Wellington Shields vs. Angel Oak Ultrashort | Wellington Shields vs. Investec Emerging Markets | Wellington Shields vs. Legg Mason Western |
Western Asset vs. Wasatch Large Cap | Western Asset vs. Legg Mason Partners | Western Asset vs. Jpmorgan Large Cap | Western Asset vs. Fidelity Large Cap |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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