Correlation Between Western Asset and Ivy Apollo

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

By analyzing existing cross correlation between Western Asset Diversified and Ivy Apollo Multi Asset, you can compare the effects of market volatilities on Western Asset and Ivy Apollo 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 Ivy Apollo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Ivy Apollo.

Diversification Opportunities for Western Asset and Ivy Apollo

0.86

Correlation Coefficient

Western Asset  Ivy Apollo

Very poor diversification

The 3 months correlation between Western and Ivy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Ivy Apollo Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Apollo Multi 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 Diversified are associated (or correlated) with Ivy Apollo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Apollo Multi has no effect on the direction of Western Asset i.e., Western Asset and Ivy Apollo go up and down completely randomly.

Pair Corralation between Western Asset and Ivy Apollo

Assuming the 90 days horizon Western Asset Diversified is expected to generate 0.62 times more return on investment than Ivy Apollo. However, Western Asset Diversified is 1.61 times less risky than Ivy Apollo. It trades about -0.19 of its potential returns per unit of risk. Ivy Apollo Multi Asset is currently generating about -0.2 per unit of risk. If you would invest  1,564  in Western Asset Diversified on October 5, 2024 and sell it today you would lose (50.00) from holding Western Asset Diversified or give up 3.2% of portfolio value over 90 days.

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

Western Asset Diversified  vs.  Ivy Apollo Multi Asset

Western Asset Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ivy Apollo Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ivy Apollo Multi Asset has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Ivy Apollo 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 Asset and Ivy Apollo

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

The idea behind Western Asset Diversified and Ivy Apollo Multi Asset 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.