Correlation Between Innovator Capital and Western Asset

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

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

Diversification Opportunities for Innovator Capital and Western Asset

0.0

Correlation Coefficient

Innovator Capital  Western Asset

Pay attention - limited upside

The 3 months correlation between Innovator and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Innovator Capital Management and Western Asset Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Total and Innovator Capital 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 Innovator Capital Management 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 Total has no effect on the direction of Innovator Capital i.e., Innovator Capital and Western Asset go up and down completely randomly.

Pair Corralation between Innovator Capital and Western Asset

If you would invest  1,946  in Western Asset Total on December 30, 2024 and sell it today you would earn a total of  59.00  from holding Western Asset Total or generate 3.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Innovator Capital Management  vs.  Western Asset Total

Innovator Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innovator Capital Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, Innovator Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Asset Total

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Total are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Western Asset is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Innovator Capital and Western Asset

The main advantage of trading using opposite Innovator Capital and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovator Capital 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 Innovator Capital Management and Western Asset Total 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.