Correlation Between Western Assets and Intech Us

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

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

Diversification Opportunities for Western Assets and Intech Us

0.32

Correlation Coefficient

Western Assets  Intech Us

Weak diversification

The 3 months correlation between Western and Intech is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Western Assets Emerging and Intech Managed Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intech Managed Volatility and Western Assets 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 Assets Emerging are associated (or correlated) with Intech Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intech Managed Volatility has no effect on the direction of Western Assets i.e., Western Assets and Intech Us go up and down completely randomly.

Pair Corralation between Western Assets and Intech Us

Assuming the 90 days horizon Western Assets Emerging is expected to generate 0.29 times more return on investment than Intech Us. However, Western Assets Emerging is 3.4 times less risky than Intech Us. It trades about 0.0 of its potential returns per unit of risk. Intech Managed Volatility is currently generating about -0.08 per unit of risk. If you would invest  1,069  in Western Assets Emerging on December 20, 2024 and sell it today you would earn a total of  0.00  from holding Western Assets Emerging or generate 0.0% return on investment over 90 days.

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

Western Assets Emerging  vs.  Intech Managed Volatility

Western Assets Emerging

Risk-Adjusted Performance

Very Weak

Over the last 90 days Western Assets Emerging has generated negative risk-adjusted returns adding no value to fund investors. 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.

Intech Managed Volatility

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Western Assets and Intech Us

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

The idea behind Western Assets Emerging and Intech Managed Volatility 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.